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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.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Why does the short-run marginal-cost curve eventually increase for he typical firm?
The short-run marginal-cost curve eventually increases for a typical firm due to the law of diminishing returns. As production expands, each additional unit of output requires more variable inputs, which leads to increased costs per unit. Initially, firms may benefit from economies of scale, but after a certain point, the inefficiencies of adding more labor or materials without a corresponding increase in productivity cause marginal costs to rise. This results in an upward-sloping marginal-cost curve in the short run.
What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
Why can firms not always reduce prices until they increase sales and profits?
if marginal production costs exceed marginal revenues, the firm will suffer losses, not profits.
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.
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Why the marginal revenues curve is always half of the demand curveexplain graphically and algebrically?
Firms in most cases opt to select prices in the elastic regions of their demand curve. This fact explains why marginal revenue curve is always below.
Why does the short-run marginal-cost curve eventually increase for he typical firm?
The short-run marginal-cost curve eventually increases for a typical firm due to the law of diminishing returns. As production expands, each additional unit of output requires more variable inputs, which leads to increased costs per unit. Initially, firms may benefit from economies of scale, but after a certain point, the inefficiencies of adding more labor or materials without a corresponding increase in productivity cause marginal costs to rise. This results in an upward-sloping marginal-cost curve in the short run.
What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
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.
According to aggregate supply curve what happens as the price level increases?
firms have more of an incentive to increase output
Why can firms not always reduce prices until they increase sales and profits?
if marginal production costs exceed marginal revenues, the firm will suffer losses, not profits.
What is a marginal cost curve?
A marginal cost curve illustrates the additional cost incurred from producing one more unit of a good or service. It typically slopes upward due to the law of diminishing returns, indicating that as production increases, the cost of producing each additional unit rises. The curve is essential for firms in determining the optimal level of production, as it helps to identify the point where marginal cost equals marginal revenue, maximizing profit.
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
Where does a oligopolist produce at the profit-maximizing?
An oligopolist maximizes profit by producing at the output level where marginal cost (MC) equals marginal revenue (MR). This typically occurs where the firm's marginal revenue curve intersects its marginal cost curve. Given the interdependence among firms in an oligopoly, this output decision also considers the reactions of competing firms, leading to strategic pricing and production choices. As a result, the oligopolist may produce less than the socially optimal output level, which can lead to higher prices for consumers.
Why does the supply curve have a positive slope?
To answer why the supply curve has a positive slope, we must understand the nature of supply and what the curve represents.The supply curve indicates that for the market to increase its output (Q), prices must increase (P). Why? The market supply curve is the collection of the firms' supply curves. Firms face rising marginal costs of production due to diminishing marginal returns to capital and labour (MPL, MPK decrease as L and K increase). That is, the second derivatives of Q(L) and Q(K) are negative. This means that if firms face increased demand and need to produce more output, they will face increasing costs as they produce this greater output. As a result, the price that they must receive to produce this output increases, in order to continue to receive a zero profit in a perfectly-competitive market.The explanation provided below describes the supply curve.The supply curve has a positive slope because of the relationship between a price change and quantity supplied. The Law of Supply tells us that as prices increase quantity supplied will increase as well and vise versa. The relationship between price and quantity supplied is positive or direct.
