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How can firms use marginal analysis to determine the price of a product?
Wiki User
∙ 9y ago
They can use this information to determine how much the consumer will buy the product for. The price must be enough to make a profit or producing the item is not worth it.
Wiki User
∙ 9y ago
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Why is marginal analysis involved in economics?
Economic theory makes much use of marginal concepts. Marginal cost, marginal revenue, marginal rate of substitution, marginal utility, marginal product, and marginal propensity to consume are a few examples. Marginal means on the margin and refers to what happens with a small change from the present position. It is the concept of economic choices to make small changes rather than large-scale adjustments. Marginal analysis is the key principle of profit-maximization in firms and utility maximization among consumers.
Firms will employ an input up to the point where?
The input's price equals its marginal revenue product
Why law of diminishing returns and return to scale might use in understanding the output decisions of firms in different industries?
show with example that if the marginal product is always decreasing the average product is always above the marginal product?
How might firms BEST use marginal analysis to determine price and output when there are additional costs related to hiring a new worker?
Marginal analysis would allow the company to identify how much more money they would have to make in order to afford another employee. It would help them figure out if hiring a new worker is the best course of action.
Does monopolistically competitive firms have horizontal marginal cost curve?
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
Why is marginal analysis involved in economics?
Economic theory makes much use of marginal concepts. Marginal cost, marginal revenue, marginal rate of substitution, marginal utility, marginal product, and marginal propensity to consume are a few examples. Marginal means on the margin and refers to what happens with a small change from the present position. It is the concept of economic choices to make small changes rather than large-scale adjustments. Marginal analysis is the key principle of profit-maximization in firms and utility maximization among consumers.
Firms will employ an input up to the point where?
The input's price equals its marginal revenue product
Why law of diminishing returns and return to scale might use in understanding the output decisions of firms in different industries?
show with example that if the marginal product is always decreasing the average product is always above the marginal product?
How might firms BEST use marginal analysis to determine price and output when there are additional costs related to hiring a new worker?
Marginal analysis would allow the company to identify how much more money they would have to make in order to afford another employee. It would help them figure out if hiring a new worker is the best course of action.
What you mean by production planning and control?
Production, planning and control is a very important in the manufacturing firms. They help in the analysis and help determine the quality of a given type of product.
Does monopolistically competitive firms have horizontal marginal cost curve?
No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.
What is the marginal physical product?
The resulting rate of change in a firms output as a result of employing one extra unit of a factor of production for example labour.
How does an increase in wages affect a firms marginal cost curve?
Bbg
Why do firms experience increasing marginal returns and then diminishing marginal returns?
The short answer would be supply and demand. As demand for the firms increase, they will experience increasing returns. Likewise, as demand decreases, so do their returns.
Which model can be used to analyze the direct and indirect costs to help firms determine the actual cost of specific technology implementations?
cost benefit analysis
Why is the equality of marginal revenue to marginal cost essential to profit maximuzation in all of the market structures?
When Marginal Cost is below Marginal Revenue, profit is increasing. When Marginal Cost is above Marginal Revenue, profit is decreasing. Since the goal of firms is to maximise profit, they should produce at a level where the MR of producing another unit is equal to the Marginal Cost of producing another unit. Firms should keep producing until this point because there is a hidden profit in MC. This is because we are not taking into account the Accounting profit.
At the most profitable level of production a firms marginal cost will be the market price?
equal to
