Explain how a firm in a competitive market identifies the profit-maximizing level of production. When should the firm raise production, and when should the firm lower production?
The firm selects the level of output at which marginal revenue is equal to marginal cost. If MR > MC, profit will increase if the firm increases Q. If MR < MC, profit will increase if the firm decreases Q.
Economics
You might also like to view...
If the real wage rises
A) firms will hire less labor. B) firms will hire additional labor. C) the marginal cost of labor falls. D) the marginal benefit of the worker increases.
Economics
A perfectly competitive firm will shut down in the short run when marginal revenue equals marginal cost at a price less than minimum average variable cost
a. True b. False Indicate whether the statement is true or false
Economics