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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.

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When a firm's marginal revenues are higher than its marginal cost?

Marginal cost is


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.


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 the marginal cost curve correspond to the supply curve?

A perfectly competitive firm's supply curve is that portion of its' marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along it's marginal cost curve in response to alternative prices. Because the marginal cost curve is positively sloped due to the law of diminishing marginal returns, the firm's supply curve is also positively sloped.


What is a business firm's marginal cost?

Marginal cost, which is the cost of producing one more unit of output, helps determine the level at which profits will be maximized.

Related Questions

When a firm's marginal revenues are higher than its marginal cost?

Marginal cost is


When a firm's marginal revenues are higher than its marginal cost?

Marginal cost is


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.


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.


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 does the marginal cost curve correspond to the supply curve?

A perfectly competitive firm's supply curve is that portion of its' marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along it's marginal cost curve in response to alternative prices. Because the marginal cost curve is positively sloped due to the law of diminishing marginal returns, the firm's supply curve is also positively sloped.


How does a firm calculate marginal cost?

In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit.


What is a business firm's marginal cost?

Marginal cost, which is the cost of producing one more unit of output, helps determine the level at which profits will be maximized.


Is it profitable for a firm to continue employing additional resources as long as?

Marginal revenue product = marginal cost


How does a firm calculate its marginal cost?

A firm calculates its marginal cost by determining the change in total cost that results from producing one additional unit of output. This is done by dividing the change in total cost by the change in quantity produced.


Discuss equilibrium of a firm under monopoly what are the conditions of equilibrium?

when marginal revenue equal to marginal cost,when marginal cost curve cut marginal revenue curve from the below and when price is greter than average total cost


IF regulation imposes marginal cost pricing on natural monopoly then the monopoly will?

When the regulating agency forces this firm to set its price at marginal cost, we havemarginal cost pricing. MONOPOLY WILL LOSS. The whole point of government involvement here relates to the fact that regulators wanted to make things more efficient. However, achieving this particular type of efficiency causes the firm to eventually exit the industry -- leaving consumers with nothing.Therefore, to prevent the firm from leaving, our regulator must also allow the monopolist to cover her losses. One way to do this is by subsidizing the monopolist the amount of her loss.