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If a purely competitive firm is producing a level of output greater than its profit-maximizing output, then its profits must be negative.
Profit-maximizing Output
The level of production at which a business achieves the highest possible profit, where marginal costs equal marginal revenue.
Purely Competitive Firm
A firm that operates in a perfectly competitive market, where there are many buyers and sellers, the product is homogeneous, and there is free entry and exit in the market.
Output Level
The total quantity of goods or services produced by a firm or industry at a given time.
- Master the techniques for boosting economic advantages and curtailing economic disadvantages for entities in sectors characterized by competition.
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Learning Objectives
- Master the techniques for boosting economic advantages and curtailing economic disadvantages for entities in sectors characterized by competition.
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