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marginal cost of production

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13y ago

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Why do the demand and marginal revenue curves coincide?

Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.


A company is maximizing profit when marginal revenue?

A company maximizes profits when marginal revenue equals marginal costs.


What happens when marginal revenue equals marginal cost?

profit is maximized


Does marginal revenue equal price in a perfectly competitive market?

Yes, in a perfectly competitive market, marginal revenue equals price.


Why are profit maximize when marginal revenue is equal to marginal cost?

Profits are maximized when marginal costs equals marginal revenue because fixed costs are now spread over a larger amount of revenue. This means that total cost per unit declines and profits increase. Another way to say this is that this is the effect of scale. When marginal revenue equals marginal costs, in a growing revenue situation, you gain economies of scale and higher profits.


How can marginal revenew and marginal costs help set the most profitable putput level?

The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.


Why is profit maximized when marginal revenue equals marginal cost?

Profit is maximized when marginal revenue equals marginal cost because at that point, the additional revenue gained from selling one more unit is equal to the additional cost of producing that unit. This balance ensures that the company is making the most profit possible, as any further increase in production would result in higher costs than revenue gained.


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 level of output every firm strives for?

The level of output every first strives for is when marginal revenue equals marginal cost.


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.


Why does demand equal marginal revenue in perfect competition?

In perfect competition, demand equals marginal revenue because firms in this market structure are price takers, meaning they have no control over the price of their product. As a result, they must sell their goods at the market price, which is also their marginal revenue.


Marginal cost equals marginal revenue?

If the firm operates in a perfectly competitive industry, profit is maximised at the ouput level where mc=mr.