Competition Market Structure2

  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.