a. List and explain the three characteristics of the MR-MC approach to determining the profit maximizing output and price for the purely competitive firm.
i.Please refer to the slide that discusses short run profit maximization Key Rule regarding the MC – MR approach and the audio to prepare the answer.
b. From the point of view of the business manager of a purely competitive firm in the short run, please explain the steps involved in using the MR MC approach to determining the firm’s:
optimal level of output,
i. the corresponding price,
ii.the firm has achieved a maximum profit,
iii. the firm has achieved a minimum loss, or
iv. the firm has achieved a shut-down condition.
Please include the roles of ATC and AVC.