Question

Suzie's ice cream shop is a competitive firm in Murray and is producing where price equals...

Suzie's ice cream shop is a competitive firm in Murray and is producing where price equals marginal cost and:

Q = 350

TR = $2450

TC = $3150

AFC = $3

What should Suzie do in the short run to maximize profits?

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Answer #1

It has been provided that Suzie's ice cream shop is a competitive firm and is producing where price equals marginal cost.

A competitive firm maximizes profit when it produce that level of output corresponding to which price equals marginal cost.

It has been provided that Suzie is producing where price equals marginal cost. This means Suzie is producing profit-maximizing output.

So, Suzie should keep producing the current level of output in the short-run to maximize profit.

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