0
The company will lose money on each additional unit produced
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
What happens to a company if marginal cost becomes higher than price?
The company will go out of business
When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Why monopoly is allocatively inefficient relative to perfectly competitive market?
A monopoly produces at a point where marginal revenue equals marginal cost, they don't charge this price, but charge a higher price that corresponds with the demand they face. Therefore they produce less and charge more than a competitive firm that equates the price to marginal cost.
When do firm adopt Marginal Cost pricing?
A company will choose marginal cost pricing, setting the price of something at or just above the variable cost of production, when they have unused remaining production capacity, or when they are not able to sell the item at a higher price.
What If marginal cost becomes higher than price what happens to a company?
The company will go out of business
What happens to a company if marginal cost becomes higher than price?
The company will go out of business
When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Why monopoly is allocatively inefficient relative to perfectly competitive market?
A monopoly produces at a point where marginal revenue equals marginal cost, they don't charge this price, but charge a higher price that corresponds with the demand they face. Therefore they produce less and charge more than a competitive firm that equates the price to marginal cost.
When do firm adopt Marginal Cost pricing?
A company will choose marginal cost pricing, setting the price of something at or just above the variable cost of production, when they have unused remaining production capacity, or when they are not able to sell the item at a higher price.
What is the relationship between marginal utility and demand?
There is a close relationship between the marginal utility and price of a commodity.The additional satisfaction from the consumption of an additional unit of the commodity is called marginal utilty. Price means the value of the goods expressed in the terms of money.Price of all units of he same goods of consumption are more or less identical.It means that the consumer pays the same price for all the units of the same goods of consumption. But marginal utility of the goods of consumption start diminishing as the consumer increase the units of consumption of the commodity.Therefore the consumer will like to pay that price for the commodity,which is equal to the marginal utility he gets from the commodity.If the price of the commodity are higher than the marginal utility he derives from the commodity he will not like to purchase the commodity. In this way there is a clod\se relation between the marginal utility and the price of the commodity.
Why is the price of video games going up?
Because as the quality of games get better, the price goes up. And as the games become a higher demand, the price becomes higher.
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.
What is the formula to find the marginal cost?
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
How do you achieve allocative efficiency?
Allocative efficiency is an output level where the price equals the marginal cost of production. This is because the price that consumers are willing to pay is equivalent to the marginal utility that they get. Therefore the optimal distribution is achieved when the marginal utility of the good equals the marginal cost.
How does the controller of a monopoly set price of goods?
the monopolist produces at a point where marginal revenue=marginal cost, he uses this quantity, and goes up vertically until the demand curve is met. This quantity is lower than a competitive equilibrium and thus, price is higher as well.
