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Under perfect competition a rm’s profit in the short run is maximized when 3 conditions are satisfied.(a) Discuss the 3 conditions.(b) From the following schedule, suggest profit maximizing level of output in the short run if price is ₹10.Output012345678910Total Cost51522273138486381101123 |
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Answer» (a) (1) MC must be equal to MR 2. MC must cut MR from below 3. Slope of MC must be greater than slope of MR. (b)
(c) Since MC = MR = 10 at 6th unit of output, the profit maximising level of output is 6 units. |
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