0
In what type of market must market price always be equal to marginal cost?
Wiki User
∙ 13y ago
Under perfect competition, since there is no room in perfect competition to earn any abnormal profits
Wiki User
∙ 13y ago
Add your answer:
Earn +20 pts
At the most profitable level of production a firms marginal cost will be the market price?
equal to
How do you find selling price?
In a perfectly competitive market, it is equal to marginal cost, it is also the point of equilibrium.
Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?
Under Perfect competition , Marginal revenue is constant and equal to the prevailing market price, since all units are sold at the same price. Thus in pure competition MR = AR = P.
How is price determined in a monopolistic market?
price eqilibrium in market is determined by demand and supply of the production.
What is the relationship in price and marginal revenue for price setters?
The marginal revenue of selling an additional unit of output for a price setter (hence within an imperfect market) is always less than market price. Picture a downwards sloping market demand curve (hence individual monopolies demand curve); at P=6, Q=2, and at P=5, Q=3. To sell an additional unit of output, the firm must drop price from 6 to 5, meaning the total revenue will increase from (6x2)=12 to (5x3)=15. This increase in revenue (marginal revenue) is $3. Note $3 is not only smaller than the original price, but than the new price as well. Hence, price is always greater than marginal revenue for a price setter.
At the most profitable level of production a firms marginal cost will be the market price?
equal to
How do you find selling price?
In a perfectly competitive market, it is equal to marginal cost, it is also the point of equilibrium.
Why is price per unit equal to the average revenue and marginal revenue of a firm under perfect competition?
Under Perfect competition , Marginal revenue is constant and equal to the prevailing market price, since all units are sold at the same price. Thus in pure competition MR = AR = P.
How is price determined in a monopolistic market?
price eqilibrium in market is determined by demand and supply of the production.
If Kevin has a marginal cost equal to 2 if the market price is 3 should Kevin increase or decease?
decrease cause the number is coming up
If the market price for a chair is 24 and the marginal cost for the chair is 7 the marginal revenue from the chair would be .?
17
What is the relationship in price and marginal revenue for price setters?
The marginal revenue of selling an additional unit of output for a price setter (hence within an imperfect market) is always less than market price. Picture a downwards sloping market demand curve (hence individual monopolies demand curve); at P=6, Q=2, and at P=5, Q=3. To sell an additional unit of output, the firm must drop price from 6 to 5, meaning the total revenue will increase from (6x2)=12 to (5x3)=15. This increase in revenue (marginal revenue) is $3. Note $3 is not only smaller than the original price, but than the new price as well. Hence, price is always greater than marginal revenue for a price setter.
If the market price for a chair is 24 and the marginal cost for the chair is 7 the marginal revenue from the chair would be . 24 17 31 7?
17
What creates a sellers market?
Inelastic Demand, Price exceeding marginal cost, excess demand
List similarities between perfectly competitive and monopoly?
There are not many similarities between a perfectly competitive market and a monopoly. In a perfectly competitive market there are no barriers to exit and enter the market. If there are excess profits being made in this market other firms will enter the market to try and get a share of those profits. Since there are many markets with a equal piece of the market share each firms production decision will have little or no effect on the market. Because of the firm's relative size to the market it must be a price taker. If the firm tries to increase the price in a perfectly competitive market then no consumers will buy from that firm because there are numerous other firms that sell that the same good. The price maximization condition of the competitive market is marginal cost equals marginal revenue. In a competitive market marginal revenue is the same as demand because the firm can sell as many as it wants in a competitive market. In a monopoly, the firm is the price setter. It is the only firm that is supplying so it has price setting power. The price maximization condition of a monopoly is marginal cost equals marginal revenue but with a caveat. Marginal revenue does not equal the demand curve, but is derived from the demand curve. Since the firm is the only supplier, assuming it cannot practice price discrimination, it must lower its price in order to gain more customers so the people who would pay a high price are paying a lower price because the firm wants to sell its products to more customers.
Discuss equilibrium of a firm under monopoly what are the conditions of equilibrium?
when marginal revenue equal to marginal cost,when marginal cost curve cut marginal revenue curve from the below and when price is greter than average total cost
What is the equilibrium price and quantity demanded of a product set in the market?
Your question is a bit confusing because of the word "set," and also because you didn't specify what type of market. A producer will equate the Price to the marginal cost, and the consumers will demand what they demand at a certain price, this demand curve is derived via their marginal utility for the good, so demand and supply curves are marginal utility and marginal cost curves in a sense. Where the supply and demand are equal is the equilibrium point in the market, this means that each party in the economy is doing as good as they can be given the specific production functions and utility functions they face. If you're looking at a graph, it is where supply and demand intersect, the vertical (Y) axis is the price and the x axis is the quantity demanded of that good.
