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From practicalpolicy.com
Suppose you ran a company that made large aircraft - a company with lots of assets, like expensive machinery, assembly plants, real-estate, and R&D laboratories. Profit is the difference between the revenues and costs from doing business. If you wanted to maximize this quarter's profits, the easiest way to do it would be to simply sell all your hundreds of billions of dollars of assets. But, such a plan is not likely to attract investors, who are interested in buying a share of ownership that has value...
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What is the profit maximizing decision a perfectly competitive firm makes in the short run and explain why this firm can make profits in the short run but not in the long run?
A perfectly competitive firm maximizes profit in the short run by producing the quantity where marginal cost equals marginal revenue. In the short run, firms can make profits due to price fluctuations and temporary market conditions, but in the long run, new firms can easily enter the market, increasing competition and driving down prices to the point where economic profits are reduced to zero.
Why maximizing shareholers' wealth is always the goal of a firm instead of maximizing profits of the firm's?
The foundation of a firm is the investment, the wealth of its promoters and more importantly the share holders. Share holders have invested their money in the firm basing on the confidence they have on the firm and believing that their investment will be safe and will fetch good reasons. Once their trust is shaken, it will ruin the firm. On account of all these, the primary goal of a firm is to maximise the share holders' wealth.
Why is the profit maximizing point when MRMC?
The profit-maximizing point occurs when marginal revenue (MR) equals marginal cost (MC) because at this point, the additional revenue gained from selling one more unit is equal to the additional cost of producing that unit. This ensures that the firm is maximizing its profits by producing the optimal quantity of goods or services.
What is firm equilibrium?
Firm equilibrium refers to a situation where a firm achieves a balance between its costs and revenues, maximizing profits. This is attained when the firm produces the level of output where marginal cost equals marginal revenue. It represents the point of optimization for the firm.
The profit-maximizing level of output for this firm?
Answers for If A Firm Is Producing A Level Of Output Where MR Exceeds MC, Would It Improve Profits By Increasing Output, Decreasing Output Or Keeping Output Unchanged?
Why should the shareholder of a firm care about maximizing a value of a firm?
the value of a firm determines their wealth.if the value of a firm,which is the market price per share of the total number of shares issued,is increased,invariably the shareholders' return is increased..by John I Agwu
Where will A profit maximizing firm produce?
Where the marginal benefits equal marginal costs.
Explain how a competitive profit-maximizing firm decides how much of each factor of production to demand?
A competitive profit-maximizing firm determines the quantity of each factor of production to demand by equating the marginal product of each factor to its marginal cost. The firm will continue to hire more of a factor as long as the additional revenue generated from that factor (marginal product times the price of the output) exceeds its cost. This process ensures that the firm utilizes resources efficiently to maximize profits. Ultimately, the firm adjusts its factor inputs until the marginal cost of each factor aligns with the added value it produces.
When a firm is maximizing profit what else will it maximize?
When a firm maximizes its profit, it automatically maximizes its shareholder value. When both profit and the shareholder value increase, in course of time, the overall firm value will increase. All these would undoubtely increase its share price in the market as well.
How can one determine the profit maximizing output from a table?
To determine the profit-maximizing output from a table, look for the quantity where the marginal revenue equals the marginal cost. This is the point where the firm maximizes its profit.
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.
Prove that profit maximizing firm will always minimise?
Profit is equal to total revenue minus total costs, if a firm wants to maximize its profit it has to lower the cost of producing a given level of output and or increase the item price if there is a willing buyer. If a firm is not minimizing costs then there exists a way for the firm to increase profits.
