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When Marginal benefit (MB) exceed Marginal cost (MC). The society values the additional unit of product more than the cost of producing it. In this case, Net benefit will increase as long as firms produces more until the point where MB = MC. (Because every additional output will add more to MB than to MC, Net benefit will rise)

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If marginal revenue is greater than marginal cost the firm should?

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.


What are benefits of marginal costing?

Marginal cost is the extra cost incurred in producing one unit of a product.If the marginal cost is more than average cost that means that costs are increasing and if it is less it means costs are decreasing.This way we find out how are business is progressing.


Why average cost increase when marginal cost is increasing?

Marginal cost = derivative of (Total cost/Quantity) Where Total cost = fixed cost + variable cost Marginal cost = derivative (Variable cost/Quantity) (by definition, fixed costs do not vary with quantity produced) Average cost = Total cost/Quantity The rate of change of average cost is equivalent to its derivative. Thus, AC' = derivative(Total cost/Quantity) => derivative (Variable cost/Quantity) = MC. So, when MC is increasing, AC' is increasing. That is, when marginal cost increases, the rate of change of average cost must increase, so average cost is always increasing when marginal cost is increasing.


What is the Importance of marginal costing in decision making?

Marginal cost is change in total cost due to increase or decrease one unit or output. It is technique to show the effect on net profit if we classified total cost in variable cost and fixed cost.


A perfectly competative firms marginal cost exceeds its marginal revenue at its current output To increase its profit the firm will?

To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point

Related Questions

What are the benefits of Marginal cost?

At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.


What is the equation for marginal net benefits?

Marginal net benefits= Marginal benefit- Marginal cost


When a firm's marginal revenues are higher than its marginal cost?

Marginal cost is


What should a monopoly do if marginal revenue exceeds marginal cost?

increase output


What should the firm do if marginal revenue is greater than marginal cost?

If a firm's marginal revenue is greater than its marginal cost, it should increase production to maximize profits.


What is the Equation for the net benefits?

Marginal net benefits= Marginal benefit- Marginal cost


How does an increase in wages affect a firms marginal cost curve?

Bbg


How can one determine the marginal benefit of a decision or action?

To determine the marginal benefit of a decision or action, one must compare the additional benefit gained from that decision or action with the additional cost incurred. This involves evaluating the increase in benefits received from each additional unit of the decision or action, and weighing it against the increase in costs. By analyzing the marginal benefit, one can make informed decisions on whether the benefits outweigh the costs.


If marginal revenue is greater than marginal cost the firm should?

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.


What are benefits of marginal costing?

Marginal cost is the extra cost incurred in producing one unit of a product.If the marginal cost is more than average cost that means that costs are increasing and if it is less it means costs are decreasing.This way we find out how are business is progressing.


How is market failure cause environmental degradation?

It is when the private marginal benefits or costs are not equal to social marginal benefits cost. Therefore, result could be likely market failure.


What is labor cost control procedure?

A procedure through which it is considered by keeping in view economics approach that the cost of labor does not increase its marginal product cost i.e. labor cost less than marginal cost.