If a perfectly competitive firm is producing a quantity where MC = MR, then profit: A. can be increased by decreasing the price. B. can be increased by decreasing production. C. can be increased by increasing production. D. is maximized.
If a perfectly competitive firm is producing a quantity where P < MC, then profit: can be increased by decreasing production. If a perfectly competitive firm is producing a quantity where P = MC, then profit: A. is maximized. If a perfectly competitive firm is producing a quantity where P > MC, then profit: D. can be increased by increasing production. If a perfectly competitive firm sells …
Oct 27, 2016 · If a perfectly competitive firm is producing a quantity where MC = MR, then profit: is maximized. If a perfectly competitive firm sells 10 units of output at a price of $30 per unit, its marginal revenue is: $30 If a perfectly competitive firm sells 300 units of output at a market price of $1 per unit, its marginal revenue is: $1.
See the answer See the answer done loading. If a perfectly competitive firm is producing a quantity that generates MC = MR, then profit. A Is maximized. B Can be increased by increasing production. C Can be increased by decreasing production. D Can be increased by decreasing the price. Expert Answer.
21) when the perfectly competitive firm produces the quantity of output at which marginal revenue equals marginal cost, it naturally: c. earns a profit, since equating marginal revenue and marginal cost guarantees profit. 22) Why must profits be zero in long-run competitive equilibrium?
Because the marginal revenue received by a perfectly competitive firm is equal to the price P, so that P = MR, the profit-maximizing rule for a perfectly competitive firm can also be written as a recommendation to produce at the quantity where P = MC.
Another way of thinking about the logic is of producing up until the point of MR=MC is that if MR>MC, the firm should make more units: it is earning a profit on each. If MR
The rule for a profit-maximizing perfectly competitive firm is to produce the level of output where Price= MR = MC, so the raspberry farmer will produce a quantity of approximately 85, which is labeled as E' in [link] (a). Remember that the area of a rectangle is equal to its base multiplied by its height.
The profit-maximizing choice for a perfectly competitive firm will occur where marginal revenue is equal to marginal cost—that is, where MR = MC. A profit-seeking firm should keep expanding production as long as MR > MC.
A firm's total profit is maximized by producing the level of output at which marginal revenue for the last unit produced equals its marginal cost, or MR = MC. In a perfectly competitive market, MR is equal to the market price P for all levels of output.
Explain in words why a profit-maximizing firm will not choose to produce at a quantity where marginal cost exceeds marginal revenue. If marginal costs exceeds marginal revenue, then the firm will reduce its profits for every additional unit of output it produces.
As long as the revenue of producing another unit of output (MR) is greater than the cost of producing that unit of output (MC), the firm will increase its profit by using more variable input to produce more output.
What happens in a perfectly competitive industry when economic profit is greater than zero? New firms may enter the industry. Existing firms may get larger. Firms may move along their LRAC curves to new outputs.
The profit-maximizing principle states that the optimal amount to sell is when MR = MC. For a firm in a perfectly competitive industry, price is equal to marginal revenue, or P = MR. So, we can restate the MR = MC condition as P = MC.
To maximize profits, a perfectly competitive firm should produce where marginal: cost equals total revenue.
The existence of economic profits attracts entry, economic losses lead to exit, and in long-run equilibrium, firms in a perfectly competitive industry will earn zero economic profit. The long-run supply curve in an industry in which expansion does not change input prices (a constant-cost industry) is a horizontal line.
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