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Why can price be substituted for marginal revenue in the MR equals MC rule?
Wiki User
∙ 14y ago
It can be substituted because the industry would become purely competitive.
Wiki User
∙ 14y 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.
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
Price can be substituted for marginal revenue in the MR equal MC rule when an industry is purely competitive because price?
Is constant regardless of the quantity demanded.
Firms will employ an input up to the point where?
The input's price equals its marginal revenue product
Why average revanue is equal to marginal revanue in imperfect competiton?
Average Revenue (AR) is equals to Marginal Revenue (MR) in Perfect competition (PC) not imperfect competition. AR can be derived from the formula= Total revenue(TR) / Quantity. Since TR = Price x Quantity, the formula now will be Price x Quantity/ Quantity and naturally, AR equals to Price. Marginal Revenue can be measured by the formula= Change in total revenue/ Change in quantity (which is 1). Since the change in total revenue will be equals to the price of the product, MR in this case will be the Price of the product. From here we can see that Price = MR = AR = Demand.
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.
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
Price can be substituted for marginal revenue in the MR equal MC rule when an industry is purely competitive because price?
Is constant regardless of the quantity demanded.
Firms will employ an input up to the point where?
The input's price equals its marginal revenue product
Why average revanue is equal to marginal revanue in imperfect competiton?
Average Revenue (AR) is equals to Marginal Revenue (MR) in Perfect competition (PC) not imperfect competition. AR can be derived from the formula= Total revenue(TR) / Quantity. Since TR = Price x Quantity, the formula now will be Price x Quantity/ Quantity and naturally, AR equals to Price. Marginal Revenue can be measured by the formula= Change in total revenue/ Change in quantity (which is 1). Since the change in total revenue will be equals to the price of the product, MR in this case will be the Price of the product. From here we can see that Price = MR = AR = Demand.
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.
A firm will maximize profits by employing the quantity of each input where the marginal does what?
revenue equals the price of each input
How to use the concept of price elasticity of demand to maximize revenue?
Price elasticity of demand is a way to determine marginal revenue. Optimal revenue and, more importantly, optimal profit will occur to the point when marginal revenue = marginal cost, or the price elasticity of demand < 1.
When demand is perfectly elastic what happens to marginal revenue?
When Demand is perfectly elastic, Marginal Revenue is identical with price.
Can marginal revenue ever be negative?
no,marginal revenue cannot be ever negative.this condition is only applies when price effect is on the revenue is greater than output effect
Relationship between Marginal revenue and Demand curve?
marginal revenue always lies behind the demand curve,and when demand increases marginal revenue also increases.demand curve is used to determine price of a commodity.
What is the condition of equilibrium for monopolist?
Marginal Revenue = Marginal Cost; mark-up price to the demand curve.
