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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.
A person should consume more of something when its marginal?
benefit exceeds its marginal cost.
If marginal revenue is 10 and marginal costs is 8 the firm should increase its output.?
Yes, if marginal revenue (MR) is 10 and marginal costs (MC) are 8, the firm should increase its output. This is because the additional revenue generated from selling one more unit (MR) exceeds the additional cost incurred to produce that unit (MC). By increasing output, the firm will continue to maximize its profit until MR equals MC. Thus, producing more units will enhance overall profitability.
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 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.
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.
A person should consume more of something when its marginal?
benefit exceeds its marginal cost.
When an organization can get optimal production?
this is obtained when a firm equates its marginal revenue to its marginal cost.At a level of output where MR exceeds MC,then the firm should increase output since the addition to revenue is greater than the addition to revenue.Where a firm's MR is less than its MC,the firm should lower its output since the addition to costs is greater than the addition to revenue.
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.
If marginal revenue is 10 and marginal costs is 8 the firm should increase its output.?
Yes, if marginal revenue (MR) is 10 and marginal costs (MC) are 8, the firm should increase its output. This is because the additional revenue generated from selling one more unit (MR) exceeds the additional cost incurred to produce that unit (MC). By increasing output, the firm will continue to maximize its profit until MR equals MC. Thus, producing more units will enhance overall profitability.
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 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 is the equality of marginal revenue to marginal cost essential to profit maximuzation in all of the market structures?
When Marginal Cost is below Marginal Revenue, profit is increasing. When Marginal Cost is above Marginal Revenue, profit is decreasing. Since the goal of firms is to maximise profit, they should produce at a level where the MR of producing another unit is equal to the Marginal Cost of producing another unit. Firms should keep producing until this point because there is a hidden profit in MC. This is because we are not taking into account the Accounting profit.
Saying the marginal costs are greater than the marginal benefits is the same as saying?
Marginal costs and marginal benefits are discussing the conditions for profit maximization. This statement can only have further explanation if it is clarified under circumstantial economic conditions. One of the conditions is that the firm is not a monopoly and that there is competition that keeps the price of the good at a single price. Another condition is that there are diminishing returns to labor and production. This means that resources are scarce for production so it becomes more costly to produce more because there are more constraints to resources and there is a limited labor skill pool. In a competitive market the wage is also assumed to be equal for everyone who is employed to do the same job. Thus, if the marginal costs are greater than the marginal benefits then the profit maximizing equation for a firm or individual is not in balance. The profit maximizing condition for a firm or individual is marginal costs equal marginal benefits. For example in the context of a firm, the marginal costs of producing is the wage it must pay to each extra worker it hires and the benefits are the goods that the worker produces for the firm to sell. Assuming that all workers are given the same wage, the firm should hire as many workers until the marginal revenue the worker produces (Marginal product*price) is equal to the wage. This implies price important because price determines how much revenue the worker makes from the product. If the firm is producing where marginal cost is above marginal benefit the firm is losing money and should get rid of some workers. If the firm has control over the price, like in a monopoly, then the profit maximization condition is a little different. In the case of a monopoly the demand curve is not the same as the marginal revenue curve. This is because in a monopoly the firm has to decrease price in order to sell more of the good because they are the only supplier. Marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve.
A manager urgues that output should be expanded so long as average revenue exceeds average cost Does this make sense to you?
This strategy is incorrect because they should decide the optimal quantity on the marginal revenue and marginal costs rather than the average revenue and average costs. It may not hold that the average revenue being higher than the average cost would lead to profits for the firm. To decide if they should produce an additional product, the firm should consider the additional cost involved with the production of this extra cost and the additional revenue incurred from the sale of this product. If this marginal revenue exceeds the marginal cost, then the firm should produce that additional unit. This decision is to be taken at all levels of output, and the firm should produce until the point where MR=MC.
What is the rule of total cost?
The rule of total cost states that a firm should continue to produce additional units of a good or service as long as the marginal cost (the cost of producing one more unit) is less than or equal to the marginal revenue (the revenue generated from selling that additional unit). When marginal costs exceed marginal revenue, it becomes unprofitable to produce more, and the firm should reduce output to maximize profits. This principle helps businesses determine the optimal level of production for maximizing profitability.
Should a monopolistically competitive firm take into account it's fixed costs when deciding how much to produce?
No. A monopolistically competitive firm should produce up to the point where marginal revenue equals marginal cost.
