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Quantitative Aptitude

Sum of Consecutive Numbers

For a firm un...

Question

For a firm under perfect competition, profits are not maximised even when $M R > M C$ . Explain why.

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Solution

For a firm under perfect competition, profits are not maximized even when MR>MC as firm's profit is maximized only when two conditions are satisfied:
a) MR=MC
b)MC starts decreasing beyond this point.

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