As we know, a firms profits are maximized where its marginal cost equals its marginal revenue: MC=MR. But we will want to know more than this o What determines the amount of profit that a firm will make? Will profits be large, or just enough for the firm to survive, or so low that it will be forced out of business? o Will the firm produce a high level of output or a low level? o Will it be producing efficiently? o Will the price charged to the consumer be high or low? More generally, will the consumer benefit from the decisions a firm makes? This is, of course, a normative question. Nevertheless economists can still identify and analyze the effects these decisions have on consumersAs we know, a firm’s profits are maximized where its marginal cost equals its marginal revenue: MC = MR. But we will want to know more than this. l What determines the amount of profit that a firm will make? Will profits be large, or just enough for the firm to survive, or so low that it will be forced out of business? l Will the firm produce a high level of output or a low level? l Will it be producing efficiently? l Will the price charged to the consumer be high or low? l More generally, will the consumer benefit from the decisions a firm makes? This is, of course, a normative question. Nevertheless, economists can still identify and analyze the effects these decisions have on consumers