3 Rules of Production:

(applies to all types of Competition)

  1. MR=MC determines the Profit Maximizing Quantity of Production (Output Level)

  2. At the Prof. Max. Quantity, find the Demand Curve and go over to Y axis for the Profit Max. Price

  3. A Firm should Shut Down (Produce Zero Ouput) if TR<TVC  ( AR<AVC )