Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market

Question:

Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market structures? Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Economics

ISBN: 978-0073375694

18th edition

Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn

See More Books

Question Posted: May 23, 2013 07:45 AM

See More Questions

Explain how, by examining a marginal revenue and marginal cost graph, you can determine the following: (a) Whether a firm is making an economic profit or suffering a loss (b) If the firm is suffering...
Describe profit maximization in terms of marginal revenue and marginal cost.
A firms marginal revenue and marginal cost functions are given by MR = 140 6Q and MC = Q2 + Q + 20 Fixed costs are 10. (a) Write down an expression for total revenue and deduce the corresponding...
A 35 ft3 rigid tank has air at 225 psia and ambient 600 R connected by a valve to a piston cylinder. The piston of area 1 ft2 requires 40 psia below it to float, Fig. P3.99. The valve is opened and...
Consider the reduced-sphere unit cell shown in Problem 3.20, having an origin of the coordinate system positioned at the atom labeled with an O. For the following sets of planes, determine which are...
16. As a complement to the standard VaR analysis, stress testing helps the risk manager investigate the worst-case loss. (True/False)
The break-even point ........ when selling price is increased.
Kathy, age 29, is married and has a son, age 3. She owns a $100,000 ordinary life insurance policy that contains a waiver-of-premium provision, guaranteed purchase option, and accelerated benefits...
thank you in advance The following information is related to the sole proprietorship of Patricia Johnson, attorney. Legal service revenue-2022 $335,000 Total expenses-2022 221,000 Assets, January 1,...
The unadjusted and adjusted trial balances for Tinker Corporation on December 31, 2011, are shown below: Journalize the nine adjusting entries that the company made on December 31,2011. TINKER...
a. At a product price of $56, will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Explain. What...
Using diagrams for both the industry and a representative firm, illustrate competitive long-run equilibrium. Assuming constant costs employ these diagrams to show how (a) an increase (b) a decrease...
In Problem discuss the validity of each statement. If the statement is always true, explain why. If it is not always true, give a counterexample. If S"f(x) dx = 0, then f(x) = 0 for all x in [a, b]....
You have two dashboards in the same workspace named Production and Manufacturing. Your company's Power BI administrator creates the following two dashboard data classifications: Medium Impact (MEDI)...
Question 2: Red Rocks Corporation was organized on September 1. Red Rocks encountered the following events during the first month of operations. a. Received $65,000 cash from the investors who...
he previous three weeks of data is below for the sales of sheds at SHEDS INC. Calculate the forecast for the next perioud (week 4) using a two period weighted moving average using weights of 3 and 2....
/3 3) ST tan(x) - In(cosx) dx What is the value of u? us dulcis) What is the corresponding value of du? du= 1-5mx dx cosx You must show all of your work in the space below to earn full credit. 9/3 So...
Please use the file which provides the data to answer the problems 1-3. Problem 1) The time Students entered the classroom of OM 390, Introductory Operations Management, was recorded by the professor...
Percentage of Credit Sales CORNERSTONE 5.2 Shanghai Company has credit sales of $\$ 550,000$ during 2018 and estimates at the end of 2018 that $2.5 \%$ of these credit sales will eventually...
How has the too-big-to-fail policy been limited in the FDICIA legislation? How might limiting the too-big-to-fail policy help reduce the risk of a future banking crisis?
Dry atmospheric air (70F, 1 atm) enters a compressor at a flow rate of 120 lbm/h. The inlet pipe on the compressor has an inside diameter of 0.5 inch. The air leaves the compressor at 175 psia, 100F....
Consider the arguments for restricting trade. a. Imagine that you are a lobbyist for timber, an established industry suffering from low-priced foreign competition, and you are trying to get Congress...
Consider the arguments for restricting trade. a. Imagine that you are a lobbyist for timber, an established industry suffering from low-priced foreign competition, and you are trying to get Congress...
You go out to the best restaurant in town and order a lobster dinner for $40. After eating half of the lobster, you realize that you are quite full. Your date wants you to finish your dinner because...
Required information Skip to question [ The following information applies to the questions displayed below. ] Forten Company's current year income statement, comparative balance sheets, and...
Give a breakdown of all the intangible assets with the values shown in the statement of financial position of Unilever in 2022.
1-The yield to maturity will be greater than the coupon rate when a bond is selling at a premium. Select one: a. False b. True 2-Which one of the following would have the greatest present value,...

Why is the equality of marginal revenue and marginal cost essential for profit maximization in all market

Question:

Step by Step Answer:

If the last unit produced adds more to costs than to revenue its production must necessarily ...View the full answer

Economics

Students also viewed these Economics questions