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If a firm can maximize its profit by producing output where price is equal to its marginal cost in which type of market is the firm operating?
Wiki User
∙ 14y ago
The firm is operating in Perfect markets. In perfect markets (Perfect competitions), the firm can maximize its profit when its MC is equal with its MR. And in perfect markets, usually the following condition is true: (MR = AR = P).
So, in equilibrium which is also the profit maximizing point for a firm, the following condition is a must:
MR = AR = P = MC.
Wiki User
∙ 14y ago
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How do you find a monopolist's profit maximising...?
The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.
Does supply equal marginal cost?
Not that I know of. Average cost does - in the form of a labour market
What is the goal of an organization?
It depends on what type of an organization it is. If it is a privately owned organization the goal is "To Maximize Profit" If it is a Public limited company (Has its shares listed in the stock market) the goal is "To Maximize shareholder wealth"
What is the force that directs the actions of individuals and businesses in a market system?
In a true capitalist market, its greed or the desire to maximize profits that drives people and businesses. In reality there are other forces that are also in play, such as altruism.
What does it mean to maximize the value of a corporation?
there are two version for this, one is called MVA (market value addition) and other is EVA ( economic value addition).
What is the golden rule of profit maximization?
To maximize profit or minimize loss, a firm should produce the quantity at which marginal revenue equals marginal cost; this rule holds for all market structures
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.
Is a market structure that consists of independent businesses that all distribute products and services that are different?
Marginal ______ calculates the advantages of producing an additional unit of a product or service.
What is another name for a Marginal Market?
any free market
How do you find a monopolist's profit maximising...?
The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.
If the market price for a chair is 24 and the marginal cost for the chair is 7 the marginal revenue from the chair would be .?
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What is marginal cost pricing?
The process of setting an item's price at the same level as the extra expense involved in producing another item. By using marginal cost pricing, a business helps keep their sales price down in order to encourage sales during slow periods or to gain market share. Read more: http://www.businessdictionary.com/definition/marginal-cost-pricing.html#ixzz3pvGG727K
How is market failure cause environmental degradation?
It is when the private marginal benefits or costs are not equal to social marginal benefits cost. Therefore, result could be likely market failure.
The equality of marginal revenue and marginal cost is essential for profit maximization in all market structures because if?
Marginal revenue and marginal cost are equal, any other output level will result in reduced profit.
The demand curve for a monopolist differs from the demand curve faced by a competitive firm?
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
In the absence of externalities the middle hand leads a market to maximize?
total benefit to society from that market
In a market economy what is the purpose of all firms?
Maximize profit
