Where the marginal benefits equal marginal costs.
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
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
When the price equals the marginal cost, it indicates that the firm is producing at an optimal level where the cost of producing one more unit is equal to the revenue gained from selling that unit. This helps the firm maximize its profits and operate efficiently.
Marginal costs and marginal benefits are discussing the conditions for profit maximization. This statement can only have further explanation if it is clarified under circumstantial economic conditions. One of the conditions is that the firm is not a monopoly and that there is competition that keeps the price of the good at a single price. Another condition is that there are diminishing returns to labor and production. This means that resources are scarce for production so it becomes more costly to produce more because there are more constraints to resources and there is a limited labor skill pool. In a competitive market the wage is also assumed to be equal for everyone who is employed to do the same job. Thus, if the marginal costs are greater than the marginal benefits then the profit maximizing equation for a firm or individual is not in balance. The profit maximizing condition for a firm or individual is marginal costs equal marginal benefits. For example in the context of a firm, the marginal costs of producing is the wage it must pay to each extra worker it hires and the benefits are the goods that the worker produces for the firm to sell. Assuming that all workers are given the same wage, the firm should hire as many workers until the marginal revenue the worker produces (Marginal product*price) is equal to the wage. This implies price important because price determines how much revenue the worker makes from the product. If the firm is producing where marginal cost is above marginal benefit the firm is losing money and should get rid of some workers. If the firm has control over the price, like in a monopoly, then the profit maximization condition is a little different. In the case of a monopoly the demand curve is not the same as the marginal revenue curve. This is because in a monopoly the firm has to decrease price in order to sell more of the good because they are the only supplier. Marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve.
Where the marginal benefits equal marginal costs.
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
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
When the price equals the marginal cost, it indicates that the firm is producing at an optimal level where the cost of producing one more unit is equal to the revenue gained from selling that unit. This helps the firm maximize its profits and operate efficiently.
Marginal costs and marginal benefits are discussing the conditions for profit maximization. This statement can only have further explanation if it is clarified under circumstantial economic conditions. One of the conditions is that the firm is not a monopoly and that there is competition that keeps the price of the good at a single price. Another condition is that there are diminishing returns to labor and production. This means that resources are scarce for production so it becomes more costly to produce more because there are more constraints to resources and there is a limited labor skill pool. In a competitive market the wage is also assumed to be equal for everyone who is employed to do the same job. Thus, if the marginal costs are greater than the marginal benefits then the profit maximizing equation for a firm or individual is not in balance. The profit maximizing condition for a firm or individual is marginal costs equal marginal benefits. For example in the context of a firm, the marginal costs of producing is the wage it must pay to each extra worker it hires and the benefits are the goods that the worker produces for the firm to sell. Assuming that all workers are given the same wage, the firm should hire as many workers until the marginal revenue the worker produces (Marginal product*price) is equal to the wage. This implies price important because price determines how much revenue the worker makes from the product. If the firm is producing where marginal cost is above marginal benefit the firm is losing money and should get rid of some workers. If the firm has control over the price, like in a monopoly, then the profit maximization condition is a little different. In the case of a monopoly the demand curve is not the same as the marginal revenue curve. This is because in a monopoly the firm has to decrease price in order to sell more of the good because they are the only supplier. Marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve.
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
Under Perfect competition , Marginal revenue is constant and equal to the prevailing market price, since all units are sold at the same price. Thus in pure competition MR = AR = P.
The relationship between price and marginal revenue affects a competitive firm's decision-making by influencing how much to produce and sell. When the price is higher than the marginal revenue, the firm will produce more to maximize profits. If the price is lower than the marginal revenue, the firm may reduce production to avoid losses. This helps the firm determine the optimal level of output to maximize profits in a competitive market.
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.
The marginal principle will tell us that a firm will maximize it's profits by choosing a quantity at which, price=marginal costs.
The marginal cost (MC) curve above the average variable cost (AVC) curve is referred to as the firm’s short-run supply curve because it indicates the minimum price at which a firm is willing to produce and supply goods in the short run. When the market price is above the AVC, the firm can cover its variable costs and contribute to fixed costs, thus incentivizing production. If the price falls below the AVC, the firm would minimize losses by shutting down production. Therefore, the portion of the MC curve above the AVC reflects the price levels at which the firm chooses to operate.
It's when the MR is not equal to MC. The firm in this case is unable to produce output the equals marginal revenue to marginal cost.