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At the most profitable level of production a firms marginal cost will be the market price?
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∙ 7y ago
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When a market is dominated by a few large profitable firms it is considered to be a?
oligopoly
How does total cost relate to total in the market total cost relate to the production output?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost = n(TC) Total cost relates to output because firms want to make a profit. Profit = TR - TC where TR = total cost and TR = total revenue. Firms produce at the quantity which MR (marginal revenue) = MC (marginal cost). At this quantity, multiply it by n number of firms in the market to achieve the total output in a market.
Why can firms not always reduce prices until they increase sales and profits?
if marginal production costs exceed marginal revenues, the firm will suffer losses, not profits.
In a free market economy firms purchase from households?
In a free market economy, firms purchase factors of production such as labor, from households.
Are profitable firms necessarily efficient firms?
yes
When a market is dominated by a few large profitable firms it is considered to be a?
oligopoly
How does total cost relate to total in the market total cost relate to the production output?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost = n(TC) Total cost relates to output because firms want to make a profit. Profit = TR - TC where TR = total cost and TR = total revenue. Firms produce at the quantity which MR (marginal revenue) = MC (marginal cost). At this quantity, multiply it by n number of firms in the market to achieve the total output in a market.
Why can firms not always reduce prices until they increase sales and profits?
if marginal production costs exceed marginal revenues, the firm will suffer losses, not profits.
In a free market economy firms purchase from households?
In a free market economy, firms purchase factors of production such as labor, from households.
Are profitable firms necessarily efficient firms?
yes
Why is the equality of marginal revenue to marginal cost essential to profit maximuzation in all of the market structures?
When Marginal Cost is below Marginal Revenue, profit is increasing. When Marginal Cost is above Marginal Revenue, profit is decreasing. Since the goal of firms is to maximise profit, they should produce at a level where the MR of producing another unit is equal to the Marginal Cost of producing another unit. Firms should keep producing until this point because there is a hidden profit in MC. This is because we are not taking into account the Accounting profit.
What is the marginal physical product?
The resulting rate of change in a firms output as a result of employing one extra unit of a factor of production for example labour.
Does monopolistically competitive firms have horizontal marginal cost curve?
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
What is an agreement among firms to divide the market or set prices or limit production called?
collusion
How did marketing start in the 1920s?
In the 1920s, firms operated under the premise that production was a seller's market
Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?
Because monopolistically competitive firms have an optimal production allocation at monopoly values: marginal revenue = marginal cost, marking-up to the demand function. When competition is not perfect, marginal revenue does not equal demand but is always below it on a Cartesian plane, so the optimal production value of a monopolistically competitive firm is both less and at a higher price than a perfectly competitive one.
In a free market economy the factor market involves which type of exchange?
a. the goods and services that households produce are purchased by firms.b. firms purchase factors of production from householdsc. Households purchase factors of production from firmsd. firms loan money to households to purchase capital
