Author Question: Why does a firm in perfect competition produce the quantity at which marginal cost equals price? ... (Read 47 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
Why does a firm in perfect competition produce the quantity at which marginal cost equals price?
 
  What will be an ideal response?

Question 2

Refer to Table 4-8. If a minimum wage of 10.50 an hour is mandated, what is the quantity of labor supplied?
 
  A) 400,000 B) 370,000 C) 340,000 D) 60,000



macagn

  • Sr. Member
  • ****
  • Posts: 345
Answer to Question 1

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. These points imply that a perfectly competitive firm will maximize profit by producing the quantity at P = MC.

Answer to Question 2

A



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Oxytocin is recommended only for pregnancies that have a medical reason for inducing labor (such as eclampsia) and is not recommended for elective procedures or for making the birthing process more convenient.

Did you know?

Never take aspirin without food because it is likely to irritate your stomach. Never give aspirin to children under age 12. Overdoses of aspirin have the potential to cause deafness.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

About 3.2 billion people, nearly half the world population, are at risk for malaria. In 2015, there are about 214 million malaria cases and an estimated 438,000 malaria deaths.

Did you know?

The first successful kidney transplant was performed in 1954 and occurred in Boston. A kidney from an identical twin was transplanted into his dying brother's body and was not rejected because it did not appear foreign to his body.

For a complete list of videos, visit our video library