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How do you find equilibrium price when given output and total cost?
The equilibrium price is the unit cost, which is the same as the total cost divided by the number of units produced (output).
How producers equilibrium is acheived with isoquants and isocost?
Producer's equilibrium is achieved at the point where an isoquant, representing combinations of inputs that produce a given level of output, is tangent to an isocost line, which represents combinations of inputs that incur the same total cost. At this tangential point, the marginal rate of technical substitution (MRTS) between the inputs equals the ratio of their prices, indicating that the producer is optimizing resource allocation. This equilibrium ensures that the producer maximizes output for a given cost, or minimizes cost for a given output level. Thus, the intersection reflects efficient input usage in production.
When marginal costs are below average cost at a given output one can deduced that if output increases?
when marginal cost are below average cost at a given output, one can deduce that,
When marginal costs are below average cost at a given output one can deduce that if output increases?
when marginal cost are below average cost at a given output, one can deduce that,
What factors determine the equilibrium price and quantity for a perfectly competitive firm in the long run?
In the long run, the equilibrium price and quantity for a perfectly competitive firm are determined by factors such as production costs, market demand, and competition from other firms. The firm will adjust its output level until it reaches a point where marginal cost equals marginal revenue, resulting in an equilibrium price and quantity.
Explain the producer's equilibrium?
Producer's equilibrium occurs when a producer maximizes profit by producing at a point where marginal cost equals marginal revenue. This leads to the most efficient allocation of resources and output level for the producer in a given market. It is a key concept in microeconomics that helps producers make production decisions.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
How does one calculate the output if you are only given the price?
To calculate the output when only given the price, you typically need additional information, such as the demand curve or the cost structure. The output can be determined by analyzing how many units consumers are willing to purchase at that price, which involves understanding the price elasticity of demand. If you have a supply curve, you can also assess how much producers are willing to supply at that price, which can help identify the equilibrium output. Without this context, it's impossible to accurately determine the output based solely on the price.
Expliain Cost- Output relationship both in the short-run and long-run?
THE SHORT-RUN COST-OUTPUT RELATIONSHIP REFERS TO A PARTICULAR SCALE OF OPERATION OR TO A FIXED PLANT. IT INDICATES VARIATIONS IN COST OVER OUTPUT FOR THE PLANT OF A GIVEN CAPACITY AND THEIR RELATIONSHIP WILL VARY WITH PLANTS OF VARYING CAPACITY.
What is firm equilibrium?
Firm equilibrium refers to a situation where a firm achieves a balance between its costs and revenues, maximizing profits. This is attained when the firm produces the level of output where marginal cost equals marginal revenue. It represents the point of optimization for the firm.
Equilibrium of firm under Perfect competition using MR and MC approach?
Equilibrium of Firm: MR - MC ApproachProfit maximization is one of the important assumptions of economics. It is assumed that the entrepreneur always tries to maximize profit. Hence the firm or entrepreneur is said to be in equilibrium if the profit is maximized. According to Tibor Sitovosky "A market or an economy or any other group of persons and firms is in equilibrium when none of its member's fells impelled to change his behavior". Naturally, the firm will not try to change its position when it is in equilibrium by maximizing profit.There are two approaches to explain the equilibrium of the firm regards to profit maximization. They are - total revenue-total cost approach and marginal revenue-marginal cost approach. Here we concentrate only on MR - MC approach.The equilibrium of firm on the basis of MR - MC approach has been presented in the table belowAccording to MT -MC approach, when marginal revenue equals marginal cost the firm is in equilibrium and gets maximum profit. Hence, a rational producer determines the quality of output where marginal revenue equals marginal cost.The difference between total revenue and total cost is highest 210, at four units of output. At this output, both marginal revenue and marginal cost are equal, 80. Hence profit is maximized. The firm is in equilibrium. It should be noted that the table relates to imperfect competition, when price is reduced to sell more.The following two conditions are necessary for a firm to be in equilibrium.(a) The marginal revenue should be equal to marginal cost.(b) The marginal cost curve should cut marginal revenue curve from below.The equilibrium of a under to MR - MC approach has been presented in figure:-The figure depicts the equilibrium of a firm under perfect competition. The same is applicable to the firms under imperfect competition. The only difference is that the AR & MR curves under imperfect competition are different and they are downward sloping.In the figure 'OP' is the given price. Since, under perfect competition, average revenue equals marginal revenue, the AR and MR curves are horizontal from P. The profit-maximizing output is OM. Here, marginal revenue and marginal cost are equal. It is because MC and MR curves intersect each other at point E. The firm earns profit equal to PEBC.The first condition necessary for firm's equilibrium is that marginal cost should be equal to marginal revenue. But this is not a sufficient condition. It is because the firm may not be in equilibrium even if this condition is fulfilled. In the figure, this condition is fulfilled at point F. but the firm is not in equilibrium. The profit is maximized only at output OM which is higher than output ON.The second condition necessary for equilibrium is that the marginal cost curve must cut marginal revenue curve from below. This implies that marginal cost should be rising at the point of intersection with MR curve. Hence, both the conditions have been fulfilled at point E. In the figure, MC curve cuts MR curve from at point F from above. Hence, this point cannot be the point of stable equilibrium. It is because before that point marginal cost exceeds marginal revenue. It shows that it is not reasonable to increase output. After point F, the MR curve lies above MC curve. This shows that it is reasonable to increase output.
Is use of least-cost input combination a necessary condition for profit maximization is it a sufficient condition explain?
1. Minimization of Cost for a Given Level of Output: Least Cost Conditions
