Abstract
Assume a profit-maximizing firm. 1. Assume that the firm supplies a strictly positive and finite quantity. Then, the rule “marginal revenues = marginal costs” holds in the optimum. 2. A firm in perfect competition always supplies according the rule “price = marginal costs” if the resulting revenues at least cover the average variable costs. 3. The firm will never make losses in its optimum because it can avoid these by leaving the market. 4. In the long-run market equilibrium with free market entry and exit, a firm’s producer surplus is always equal to zero.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
