PROFIT MAXIMIZATION True and false: TOTAL If the TC curve is greater than TR curve, then the firm is experiencing a loss 2 If you find that marginal cost is falling when it is equal to the marginal revenue, increasing production until the two curves meet again is a profit maximizing decision. A firm faces a constant market price of $12 and the marginal cost is $10. This firm should never stop producing There are some circumstances where profit maximization occurs at a positive level output when MC and MR are different If the MR for a firm is currently equal to MC at an output where AVC is rising, the firm should shut down. L6 Following the MR-MC rule tells us how much profit can be made. If the price of a product cannot cover its AVC, the firm should shut down immediately 28 A business firm will never operate at a loss Marginal cost is always positive 10 ATC always exceeds AVC if MR is greater than MC, the firm should increase output 12. Price is MR only if price is fixed MULTIPLE CHOICE: AVERAGE TOTAL COS 1 Price-ATC would be a measure of the firm's TOTAL PROFII (P-ATC) Amarginal profit