IN A NUTSHELL Depicted in this unit were the mechanisms in perfect competition. A rm that wanted to maximize profit and minimize losses need to follow the F=MR=MC rule, which leads to the optimum level of production. 0n the other side, it is not advisable for firms that when incurring losses to shut down the business. As long as the MR of the firm can still cover the AVE, it is not advisable to stop operations. It is only.r when the P=MR=MC is less than the AM: that it is no longer economically viable to operate the business that the firm is advised to shut down. Please state three arguments in which the P=MR=MC is not applicable