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What makes a firm not to go out of production when it is making less than its cost of production?

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Question added by Njilamtein Forsang , Business professional
Date Posted: 2015/10/04
MOHD NIJAM MUJEEB MUJEEB
by MOHD NIJAM MUJEEB MUJEEB , Senior Procurement Officer , Musanadah Facilities Management Company Ltd.

The exact word for this situation would be strategy called Profit Maximization. If a company has a huge cost of production definitely it should be controlled based on the profit and the limit of cost the company could bear.  It is which a firm determines the price and output level that returns the greatest profit. The total revenue, total cost perspective relies on the fact that profit equals revenue minus cost and focuses on maximizing this difference.

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