It is producing where P* = MC, which we know maximizes profit. However, even though this firm is doing the best possible,
it's still incurring losses. Let's see how to show this graphically...
(Actually it might be better for the firm to shut down, but for
now let's suppose that isn't the case. Short run shut down is covered ahead.)
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved