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At Its Current Level of Production a Profit-Maximising Firm in a Competitive

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Essay

At its current level of production a profit-maximising firm in a competitive market receives R12.50 for each unit it produces and faces an average total cost of R10. At the market price of R12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1 000 units. What is the firm's current profit? What is likely to occur in this market and why?


Definitions:

Balance Sheet

An account reporting an organization's resources, debts, and owner's equity at a particular instant.

Stock Dividend

An issuance of more shares to investors as a dividend, instead of a cash distribution.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to vote on corporate matters and receive dividends.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and equity, at a specific point in time.

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