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It's when the MR is not equal to MC. The firm in this case is unable to produce output the equals marginal revenue to marginal cost.
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∙ 15y ago
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Which market structure is the demand curve of the market represented by the demand curve of the firm?
oligopoly
What is the equilibrium of a firm?
The equilibrium of a firm depends with the elasticity of a demand curve.
What is the distinctive feature of the demand curve of a firm in pure competition?
The demand curve would be perfectly elastic.
What is the demand curve for output of a perfectly competitive firm?
Demand = Price = Marginal Cost.
What will a monopolist firm do if it's demand curve lies below its average variable cost curve?
It will shut down.
Why does a Perfect Competition firms demand curve is also its marginal revenue curve?
AnswerFor a perfectly competitive firm with no market control, the marginal revenue curve is a horizontal line. Because a perfectly competitive firm is a price taker and faces a horizontal demand curve, its marginal revenue curve is also horizontal and coincides with its average revenue (and demand) curve. Yes - what you must remember is that a firm's demand curve in perfect competition is its average revenue curve. Average revenue = price x quantity / quantity = price. The demand curve shows the quantity demanded at varying prices and this is exactly what the average revenue curve will do.Because there are so many sellers in the market, no one firm has enough market power to influence price (if a firm tried to raise price consumers would move to different suppliers; nobody would buy the good), therefore price is determined by industry supply and demand, and a firm can produce any quantity at this price . This means that the firm faces a horizontal average revenue (demand curve) and if average revenue is constant, this means total revenue is increasing at a constant rate, and therefore marginal revenue is constant as well.
Why is the demand curve the same as the marginal revenue curve for a perfectly competitive firm?
Because for a perfectly competetive firm since the demand curve is perfectly elastic even a slightest price change doesnt add any further demand..so there is no change in marinal revenue also.Since revenue is demand multiplied with cost of unit..the two curves are same.
The demand curve for a monopolist differs from the demand curve faced by a competitive firm?
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
What type of curve does the perfectly competitive firm face?
perfectly elastic demand function.
A firm in a monopolistically competitive market is similar to a monopolist in the sense that it?
faces a downward-sloping demand curve
When a second firm enters a monopolist's market what will the initial demand curve facing the monopolist do?
shift to the left.
Is it true the demand curve of a monopolistic competitive firm is more elastic than that of a pure monopolist?
YES
