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Given that P=R-C where P is profit, R revenue and C cost, it follows that marginal profit dP/dQ = dR/dQ-dC/dQ where P,R and C are all functions of the output Q. Maximizing profit means setting dP/dQ = 0. Then dR/dQ = dC/dq where dR/dQ and dC/dq are marginal revenue and marginal cost respectively.

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What is the relationship between price and marginal revenue in a competitive market?

In a competitive market, the relationship between price and marginal revenue is that they are equal. This means that the price of a good or service is equal to the marginal revenue generated from selling one more unit of that good or service.


What is the relationship between marginal cost and marginal revenue in determining optimal production levels?

The relationship between marginal cost and marginal revenue in determining optimal production levels is that a company should produce at a level where marginal cost equals marginal revenue. This is because at this point, the company maximizes its profits by balancing the additional cost of producing one more unit with the additional revenue generated from selling that unit.


What is the relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm?

The relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm is that the firm should produce at a level where marginal revenue equals marginal cost. This is because at this point, the firm maximizes its profits by balancing the additional revenue gained from producing one more unit with the additional cost of producing that unit.


Relationship between Marginal revenue and Demand curve?

marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.


What is the relationship between price elasticity of demand and the monopolist's revenue?

marginal revenue is negative where demand is inelastic

Related Questions

What is the relationship between price and marginal revenue in a competitive market?

In a competitive market, the relationship between price and marginal revenue is that they are equal. This means that the price of a good or service is equal to the marginal revenue generated from selling one more unit of that good or service.


What is the relationship between marginal cost and marginal revenue in determining optimal production levels?

The relationship between marginal cost and marginal revenue in determining optimal production levels is that a company should produce at a level where marginal cost equals marginal revenue. This is because at this point, the company maximizes its profits by balancing the additional cost of producing one more unit with the additional revenue generated from selling that unit.


What is the relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm?

The relationship between marginal revenue and marginal cost in determining the optimal level of production for a firm is that the firm should produce at a level where marginal revenue equals marginal cost. This is because at this point, the firm maximizes its profits by balancing the additional revenue gained from producing one more unit with the additional cost of producing that unit.


Relationship between Marginal revenue and Demand curve?

marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.


What is the relationship between price elasticity of demand and the monopolist's revenue?

marginal revenue is negative where demand is inelastic


Marginal revenue curve?

Explain why the marginal revenue(MR) is always less than the average revenue (AR)?


What is the relationship between total average and marginal revenue under monopoly with the help of schedule and diagram?

Total average pertains to annual revenue. While marginal revenue is equivalent to quarterly profits. The relationship between the two is only that one is the dividend of the other.


What is the distinction between marginal revenue product and marginal revenue?

I'm thinking that marginal revenue product is the marginal revenue on one product, and marginal revenue is the marginal revenue on the whole firm sales... I'm wondering the same thing but the above response is incorrect. both terms imply values on one item as indicated by the "marginal"


How does the relationship between price and marginal revenue impact the decision-making process of a competitive firm?

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.


What is the marginal revenue formula from the demand function and how does it impact pricing strategies?

The marginal revenue formula from the demand function is the derivative of the total revenue function with respect to quantity. It is calculated by finding the change in total revenue when one additional unit is sold. Marginal revenue helps businesses determine the optimal level of production and pricing strategies by showing how changes in quantity sold affect revenue. It is used to maximize profits by setting prices based on the relationship between marginal revenue and marginal cost.


Is there any relationship between marginal revenue curve and demand curve?

Yes, there is a relationship between the marginal revenue curve and the demand curve. For a monopolistic firm, the marginal revenue curve lies below the demand curve because the firm must lower the price on all units sold to sell additional units, resulting in diminishing marginal revenue. In contrast, for a perfectly competitive firm, the marginal revenue curve is horizontal and coincides with the demand curve, as the firm can sell any quantity at the market price without affecting it. Thus, while the two curves are related, their positions and shapes differ based on the market structure.


What is marginal profit?

In economics, marginal profit is the difference between the marginal revenue and the marginal cost of producing an additional unit of output.