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The marginal cost increases as production levels rise because of diminishing returns. This means that as more units are produced, the additional cost of producing each additional unit also increases. This is due to factors such as limited resources, increased labor costs, and inefficiencies in the production process.
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What is the best definition of marginal cost?
Marginal cost is defined as the additional cost incurred by producing one more unit of a good or service. It represents the change in total cost that arises from a unit increase in production. Understanding marginal cost is essential for businesses as it helps in making decisions about pricing, production levels, and resource allocation. By analyzing marginal costs, companies can optimize their operations for maximum profitability.
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 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.
A monopolist will set its production at a level where marginal cost is equal to?
A monopolist will set production at a level where marginal cost is equal to marginal revenue.
Marginal revenue equals?
marginal cost of production
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.
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.
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 maginal cost?
Marginal cost is the increase or decrease in the total cost of a production run for making one additional unit of an item.
A monopolist will set its production at a level where marginal cost is equal to?
A monopolist will set production at a level where marginal cost is equal to marginal revenue.
Marginal revenue equals?
marginal cost of production
Why a producer would continue to increase output even though the marginal cost?
...of production may be rising? Answer: Because of increase in demand.
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
How can one determine the marginal cost of a product or service?
To determine the marginal cost of a product or service, you can calculate the change in total cost when producing one additional unit. This can be done by dividing the change in total cost by the change in quantity produced. The marginal cost helps businesses make decisions about pricing and production levels.
What should a monopoly do if marginal revenue exceeds marginal cost?
increase output
The best example of marginal cost is the money paid in order to purchase?
The best example of marginal cost is the money paid to purchase one additional unit of a good or service. For instance, if a company produces widgets and the cost to produce one more widget is $5, then the marginal cost of that additional widget is $5. This cost reflects the increase in total production costs that results from producing one more unit. Understanding marginal cost is crucial for businesses when making decisions about scaling production.
When is economic surplus maximized?
when the marginal benefit of consumption is equal to the marginal cost of production.
