Producing at the output level corresponding to MR=MC will guarantee profits. State true or false.

True

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False

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Solution

The correct option is B
False

Producing at the output level corresponding to MR=MC will guarantee profits if and only if the price is greater than the minimum value of SAC. Hence, the statement is false.

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To maximize profit, a firm must always produce at the efficient scale or the minimum cost output. State true or false.

See the MC and MR curves for a firm given below and identify the profit-maximizing level of output.

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n p n

0

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C

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