Output in short run, Microeconomics

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Selecting Output in Short Run

* We will combine production and cost analysis with demand to determine output and profitability.

A Competitive Firm Making Positive Profit

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Selecting Output in Short Run

* Production Decisions' summary

- Profit can be maximized when MC = MR

- If P > ATC firm is making profits.

- If AVC < P < ATC firm should generate at a loss.

- If P < AVC < ATC firm should shut-down.

The Short Run Output of Aluminum Smelting Plant

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