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At this intersection point on a graph, firms will earn maximum profit, even if this point is under average total cost.
What else can I help you with?
Marginal revenue equals?
marginal cost of production
What happens when marginal revenue equals marginal cost?
profit is maximized
Why is it that when a firms marginal revenue product equals the wage rate marginal revenue also equals the marginal cost?
When a firm's marginal revenue product (MRP) equals the wage rate, it indicates that the additional revenue generated by hiring one more unit of labor matches the cost of employing that labor. At this point, the firm maximizes its profit by employing labor up to the point where the cost of additional labor (wage) equals the additional revenue generated (MRP). Consequently, since marginal revenue (MR) from selling output also equals the price in a competitive market, and given that marginal cost (MC) reflects the cost of producing additional output, the condition where MRP equals wage leads to the situation where MR equals MC, ensuring optimal production decisions.
Cost of goods sold plus gross profit equals?
Cost of goods plus gross profit margin equals to total sales revenue of firm.
True or false Profit equals Total Cost less Total Revenue?
TRUE
True or false Profits will be maximized when total revenue equals total cost?
yes
Is contribution margin equals sale revenue minus all variable cost?
yes.
True or false Will profits be maximized when total revenue equals total cost?
yes
What is the formula for Total Revenue and Total Cost?
Total revenue equals the sale price of products multiplued by the total amount of units sold
Why is profit maximized when marginal revenue equals marginal cost?
Profit is maximized when marginal revenue equals marginal cost because at that point, the additional revenue gained from selling one more unit is equal to the additional cost of producing that unit. This balance ensures that the company is making the most profit possible, as any further increase in production would result in higher costs than revenue gained.
When p equals ar equals mr equals ac equals mc?
When price (p), average revenue (ar), marginal revenue (mr), average cost (ac), and marginal cost (mc) are equal, a firm is in a state of long-run equilibrium in perfect competition. In this scenario, the firm earns normal profits, as total revenue equals total cost, and there is no incentive for firms to enter or exit the market. This equality indicates that firms are maximizing their profits while producing at the most efficient scale. Consequently, resources are allocated efficiently in the market.
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.
