Will production be ever undertaken if $P < M C$ for a profit maximising firm under perfect competition? Give reasons is support of your answer.

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Solution

Production will not be undertaken if P<MC for a profit maximizing firm under perfect competition as because a firm under perfect competition will continue its production if P>MC or P=MC. Under perfect competition P=AR, thus it will continue its production till AR=MC=P.

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Will production be ever undertaken if P<MC for a profit maximising firm under perfect competition? Give reasons is support of your answer.

Production will not be undertaken if P<MC for a profit maximizing firm under perfect competition as because a firm under perfect competition will continue its production if P>MC or P=MC. Under perfect competition P=AR, thus it will continue its production till AR=MC=P.

Will production be ever undertaken if $P < M C$ for a profit maximising firm under perfect competition? Give reasons is support of your answer.