At this intersection point on a graph, firms will earn maximum profit, even if this point is under average total cost.
If MR is greater than MC, the firm should increase their production. The ideal amount of production is determined by allowing the marginal cost to equal the marginal revenue.
yes
To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point
marginal revenue
The increase or decrease in the total cost of a production run for making one additional unit of an item. It is computed in situations where the breakeven point has been reached: the fixed costs have already been absorbed by the already produced items and only the direct (variable) costs have to be accounted for. Marginal costs are variable costs consisting of labor and material costs, plus an estimated portion of fixed costs (such as administration overheads and selling expenses). In companies where average costs are fairly constant, marginal cost is usually equal to average cost. However, in industries that require heavy capital investment (automobile plants, airlines, mines) and have high average costs, it is comparatively very low. The concept of marginal cost is critically important in resource allocation because, for optimum results, management must concentrate its resources where the excess of marginal revenue over the marginal cost is maximum. Also called choice cost, differential cost, or incremental cost. Read more: http://www.businessdictionary.com/definition/marginal-cost.html#ixzz2Mdg26AC0
A monopolist will set production at a level where marginal cost is equal to marginal revenue.
equal to marginal revenue
A way to find the best level of output is to find the output level where marginal revenue is equal to marginal cost.
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
Marginal revenue and marginal cost are equal, any other output level will result in reduced profit.
Its the level of production where marginal cost is equal to marginal revenue.
If MR is greater than MC, the firm should increase their production. The ideal amount of production is determined by allowing the marginal cost to equal the marginal revenue.
marginal revenue
marginal revenue
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
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.
marginal cost of production