in the short run, a profit-maximizing firm in a price-taker market will definitely stop production if
In the short run, a profit-maximizing firm in a price-taker market will definitely stop production if
Answer: In the short run, a profit-maximizing firm operating in a price-taker market will choose to stop production if the marginal cost (MC) exceeds the market price (P). This decision is based on the logic that in the short run, a firm should only produce if the revenue from selling its output at the market price is sufficient to cover at least the variable costs of production. If the marginal cost of producing an additional unit surpasses the market price, it means that the firm is losing money on each additional unit produced. Therefore, the firm would be better off halting production to avoid further losses. This decision aligns with the profit-maximizing objective, as continuing production under such circumstances would decrease the firm’s overall profit.