0
Profits are maximized when average cost (AC) equals marginal cost (MC) because this condition indicates that the firm is producing at an optimal output level. When MC is less than AC, producing additional units decreases average cost, suggesting more output would increase profits. Conversely, if MC exceeds AC, producing more would raise average costs and decrease profits. Therefore, the equilibrium point where AC equals MC is where the firm achieves maximum profitability.
What else can I help you with?
A producers profits are maximized when marginal costs are?
equal to marginal revenue
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to?
marginal revenue
In the long-run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to?
marginal revenue
What is happening to average variable costs when they equal marginal costs?
When average variable costs equal to the average marginal cost, the average variable cost will be at the minimum point. i.e. lowest cost
A producers profits are maximized when marginal costs are?
equal to marginal revenue
A producers profits are maximized when marginal costs are .?
equal to marginal revenue
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to?
marginal revenue
In the long-run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to?
marginal revenue
Why are profit maximize when marginal revenue is equal to marginal cost?
Profits are maximized when marginal costs equals marginal revenue because fixed costs are now spread over a larger amount of revenue. This means that total cost per unit declines and profits increase. Another way to say this is that this is the effect of scale. When marginal revenue equals marginal costs, in a growing revenue situation, you gain economies of scale and higher profits.
What is happening to average variable costs when they equal marginal costs?
When average variable costs equal to the average marginal cost, the average variable cost will be at the minimum point. i.e. lowest cost
When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
Perfectly competitive firm in long run equilibrium?
what about them? profits are 0 price=marginal cost all costs are variable optimal allocation of inputs is where marginal rate of technical substitution is equal to the price ratio of the inputs.
Does supply equal marginal cost?
Not that I know of. Average cost does - in the form of a labour market
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
What happens if marginal cost is equal to average total cost?
When marginal cost is equal to average total cost, it means that the cost of producing one more unit is the same as the average cost of all units produced. This indicates that the firm is operating at its most efficient level of production.
