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.
If a firm's marginal revenue is greater than its marginal cost, it should increase production to maximize profits.
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.
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.
inefficient overproduction
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.
If a firm's marginal revenue is greater than its marginal cost, it should increase production to maximize profits.
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 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.
inefficient overproduction
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.
It occurs when an additional unit of labour employed brings a marginal product greater than the previous marginal product.
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.
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.
less than zero, greater than the requred return
no,marginal revenue cannot be ever negative.this condition is only applies when price effect is on the revenue is greater than output effect
greater than average profit.
Another advantage of having a small business is greater profitability