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When MC>MR, then there is an overallocation of resources. This usually happens with a negative externality. The government tries to taxes these businesses so that they will produce less. Therefore, a way to fix overallocation of resources is to tax that company and reduce their output.
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What should a monopoly do if marginal revenue exceeds marginal cost?
increase output
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
A company is maximizing profit when marginal revenue?
A company maximizes profits when marginal revenue equals marginal costs.
A producers profits are maximized when marginal costs are?
equal to marginal revenue
How can marginal revenew and marginal costs help set the most profitable putput level?
The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.
What should a monopoly do if marginal revenue exceeds marginal cost?
increase output
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
A company is maximizing profit when marginal revenue?
A company maximizes profits when marginal revenue equals marginal costs.
A producers profits are maximized when marginal costs are?
equal to marginal revenue
A producers profits are maximized when marginal costs are .?
equal to marginal revenue
Why are profit maximize when marginal revenue is equal to marginal cost?
Profits are maximized when marginal costs equals marginal revenue because fixed costs are now spread over a larger amount of revenue. This means that total cost per unit declines and profits increase. Another way to say this is that this is the effect of scale. When marginal revenue equals marginal costs, in a growing revenue situation, you gain economies of scale and higher profits.
How can marginal revenew and marginal costs help set the most profitable putput level?
The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.
How do you determine the optimal level of advertising?
the optimal level of advertising expenditure for the firm is determined where the marginal revenue increase in costs of advertising are equal to the marginal increase in revenue
When an organization can get optimal production?
this is obtained when a firm equates its marginal revenue to its marginal cost.At a level of output where MR exceeds MC,then the firm should increase output since the addition to revenue is greater than the addition to revenue.Where a firm's MR is less than its MC,the firm should lower its output since the addition to costs is greater than the addition to revenue.
When a perfectly competitive firm is at its profit maximizing level of output you can say that it is?
is producing where price exceeds marginal costs
What is the distinction between marginal revenue product and marginal revenue?
I'm thinking that marginal revenue product is the marginal revenue on one product, and marginal revenue is the marginal revenue on the whole firm sales... I'm wondering the same thing but the above response is incorrect. both terms imply values on one item as indicated by the "marginal"
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
