0
When the price is higher than the marginal cost for a firm in a competitive market, it means the firm can make more profit by producing and selling more goods. This influences the firm's decision-making process by encouraging them to increase production to maximize profits. As a result, the firm's overall profitability is likely to increase as they take advantage of the higher prices to boost their revenue.
What else can I help you with?
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.
Why is marginal cost the key to economic decision?
People make decisions at the margin; they strictly measure whether the incremental benefit from the next unit of allocation is greater or equal to the marginal cost. Since marginal cost is part of the profitability of an action, the cost affects whether the next unit's return is positive or not, so it helps to determine whether that actor takes that action or not.
Why is demand greater than marginal revenue for all imperfectly competitive firms?
In imperfectly competitive markets, firms have some control over the prices they charge. Demand is greater than marginal revenue for these firms because they must lower prices to sell more products, which reduces the revenue they earn on each additional unit sold. This is because they face downward-sloping demand curves, meaning they have to lower prices to attract more customers.
When the marginal social cost is greater than the marginal social benefit what happens?
inefficient overproduction
Why monopsonist hires fewer workers than a firm in competitive labor market?
A monopsonist hires fewer workers than a firm in a competitive labor market because it is the sole buyer of labor, giving it greater market power to set wages. Unlike competitive firms that accept the market wage, a monopsonist must raise wages to attract additional workers, leading to higher marginal costs for hiring. As a result, the monopsonist will hire workers up to the point where the marginal cost of labor equals the marginal revenue product, which typically occurs at a lower quantity of employment compared to competitive firms. This results in a lower overall employment level in the monopsonistic market.
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.
Why is marginal cost the key to economic decision?
People make decisions at the margin; they strictly measure whether the incremental benefit from the next unit of allocation is greater or equal to the marginal cost. Since marginal cost is part of the profitability of an action, the cost affects whether the next unit's return is positive or not, so it helps to determine whether that actor takes that action or not.
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.
Why is demand greater than marginal revenue for all imperfectly competitive firms?
In imperfectly competitive markets, firms have some control over the prices they charge. Demand is greater than marginal revenue for these firms because they must lower prices to sell more products, which reduces the revenue they earn on each additional unit sold. This is because they face downward-sloping demand curves, meaning they have to lower prices to attract more customers.
When the marginal social cost is greater than the marginal social benefit what happens?
inefficient overproduction
Why monopsonist hires fewer workers than a firm in competitive labor market?
A monopsonist hires fewer workers than a firm in a competitive labor market because it is the sole buyer of labor, giving it greater market power to set wages. Unlike competitive firms that accept the market wage, a monopsonist must raise wages to attract additional workers, leading to higher marginal costs for hiring. As a result, the monopsonist will hire workers up to the point where the marginal cost of labor equals the marginal revenue product, which typically occurs at a lower quantity of employment compared to competitive firms. This results in a lower overall employment level in the monopsonistic market.
What happens if the marginal benefit is greater than the marginal cost?
If the marginal benefit is greater than the marginal cost, it indicates that the additional benefit gained from an action outweighs the additional cost incurred. This scenario suggests that the action is economically favorable and should be pursued, as it leads to an overall increase in welfare or profit. Consequently, decision-makers are likely to continue with the action until the marginal benefits and marginal costs become equal.
What is increasing returns to a factor?
It occurs when an additional unit of labour employed brings a marginal product greater than the previous marginal product.
What are increasing marginal returns?
ncreasing marginal returns mean that marginal product is greater for each subsequent unit of a variable input than it was for the previous unit. Decreasing marginal returns, as such, mean that marginal product is less for each subsequent unit of a variable input than it was for the previous unit.
How can one determine the marginal revenue from marginal cost in a business setting?
To determine the marginal revenue from marginal cost in a business setting, one can calculate the change in revenue from selling one additional unit of a product and compare it to the change in cost from producing that additional unit. If the marginal revenue is greater than the marginal cost, it is profitable to produce more units.
Can marginal revenue ever be negative?
no,marginal revenue cannot be ever negative.this condition is only applies when price effect is on the revenue is greater than output effect
For the NPV criteria a project is acceptable if the NPV is while for the profitability index a project is acceptable if the profitability index is?
less than zero, greater than the requred return
