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Marginal cost is
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When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
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 does an increase in wages affect a firms marginal cost curve?
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When marginal revenue equal to marginal cost?
At this intersection point on a graph, firms will earn maximum profit, even if this point is under average total cost.
When marginal revenue equals marginal cost?
At this intersection point on a graph, firms will earn maximum profit, even if this point is under average total cost.
Why is the equality of marginal revenue to marginal cost essential to profit maximuzation in all of the market structures?
When Marginal Cost is below Marginal Revenue, profit is increasing. When Marginal Cost is above Marginal Revenue, profit is decreasing. Since the goal of firms is to maximise profit, they should produce at a level where the MR of producing another unit is equal to the Marginal Cost of producing another unit. Firms should keep producing until this point because there is a hidden profit in MC. This is because we are not taking into account the Accounting profit.
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
At the most profitable level of production a firms marginal cost will be the market price?
equal to
Where does a oligopolist produce at the profit-maximizing?
An oligopolist maximizes profit by producing at the output level where marginal cost (MC) equals marginal revenue (MR). This typically occurs where the firm's marginal revenue curve intersects its marginal cost curve. Given the interdependence among firms in an oligopoly, this output decision also considers the reactions of competing firms, leading to strategic pricing and production choices. As a result, the oligopolist may produce less than the socially optimal output level, which can lead to higher prices for consumers.
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)
Perfect competition is efficient in the long run because price marginal cost and firms are producing at minimum?
Perfect competition is efficient in the long run because price _____ marginal cost and firms are producing at minimum _____.
How does total cost relate to total in the market total cost relate to the production output?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost = n(TC) Total cost relates to output because firms want to make a profit. Profit = TR - TC where TR = total cost and TR = total revenue. Firms produce at the quantity which MR (marginal revenue) = MC (marginal cost). At this quantity, multiply it by n number of firms in the market to achieve the total output in a market.
