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How does an increase in wages affect a firms marginal cost curve?
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∙ 11y ago
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∙ 11y ago
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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.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
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.
Why does the supply curve have a positive slope?
To answer why the supply curve has a positive slope, we must understand the nature of supply and what the curve represents.The supply curve indicates that for the market to increase its output (Q), prices must increase (P). Why? The market supply curve is the collection of the firms' supply curves. Firms face rising marginal costs of production due to diminishing marginal returns to capital and labour (MPL, MPK decrease as L and K increase). That is, the second derivatives of Q(L) and Q(K) are negative. This means that if firms face increased demand and need to produce more output, they will face increasing costs as they produce this greater output. As a result, the price that they must receive to produce this output increases, in order to continue to receive a zero profit in a perfectly-competitive market.The explanation provided below describes the supply curve.The supply curve has a positive slope because of the relationship between a price change and quantity supplied. The Law of Supply tells us that as prices increase quantity supplied will increase as well and vise versa. The relationship between price and quantity supplied is positive or direct.
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.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Why the marginal revenues curve is always half of the demand curveexplain graphically and algebrically?
Firms in most cases opt to select prices in the elastic regions of their demand curve. This fact explains why marginal revenue curve is always below.
Why do firms experience increasing marginal returns and then diminishing marginal returns?
The short answer would be supply and demand. As demand for the firms increase, they will experience increasing returns. Likewise, as demand decreases, so do their returns.
What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
According to aggregate supply curve what happens as the price level increases?
firms have more of an incentive to increase output
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.
A perfectly competative firms marginal cost exceeds its marginal revenue at its current output To increase its profit the firm will?
To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point
Why does the supply curve have a positive slope?
To answer why the supply curve has a positive slope, we must understand the nature of supply and what the curve represents.The supply curve indicates that for the market to increase its output (Q), prices must increase (P). Why? The market supply curve is the collection of the firms' supply curves. Firms face rising marginal costs of production due to diminishing marginal returns to capital and labour (MPL, MPK decrease as L and K increase). That is, the second derivatives of Q(L) and Q(K) are negative. This means that if firms face increased demand and need to produce more output, they will face increasing costs as they produce this greater output. As a result, the price that they must receive to produce this output increases, in order to continue to receive a zero profit in a perfectly-competitive market.The explanation provided below describes the supply curve.The supply curve has a positive slope because of the relationship between a price change and quantity supplied. The Law of Supply tells us that as prices increase quantity supplied will increase as well and vise versa. The relationship between price and quantity supplied is positive or direct.
Why is the marginal revenue curve the same as its demand curve?
The marginal revenue curve describes the incremental change in revenue (that is, price*units sold). The MR is not always equivalent to its demand curve. The more perfect competition is, the closer demand approaches the MR. This is because, in perfect competition, firms sell at the MC = MR = P criterion. In the opposite case, monopoly, MR always lies under of demand, and firms achieve monopoly profits by choosing a production quantity where MC = MR and charging a price mark-up.
What happens to the aggregate supply curve as the price level increases?
Firms have more of an incentive to increase output
What is Another name for firms demand curve?
Average revenue curve
