This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Why does the profit-maximizing level of production occur at the point where marginal revenue equals ... (Read 101 times)

luminitza

  • Hero Member
  • *****
  • Posts: 555
on: Jun 29, 2018
Why does the profit-maximizing level of production occur at the point where marginal revenue equals marginal cost?
 
  What will be an ideal response?

Question 2

Which of the following is NOT a government-run income maintenance program?
 
  A) Social Security
  B) unemployment compensation
  C) temporary Assistance of Needy Households
  D) life insurance


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

sarajane1989

  • Sr. Member
  • ****
  • Posts: 296
Reply #1 on: Jun 29, 2018
Answer to Question 1

If a firm produces at a level where marginal revenue is greater than marginal cost, more profit could be gained by increasing output. Why? Because the added revenue (the marginal revenue) from producing another unit exceeds the added cost (the marginal cost) of producing the unit. Therefore the firm should increase production until no more additional profit can be earned, which occurs where marginal revenue equals marginal cost.
Similarly, if a firm produces at a level where marginal cost exceeds marginal revenue, the firm's profit would rise by decreasing output. In this case, the saved costs (the marginal cost) exceed the lost revenue (the marginal revenue). Therefore the firm should decrease production until the point at which marginal cost equals marginal revenue.

Answer to Question 2

D


luminitza

  • Member
  • Posts: 555
Reply 2 on: Jun 29, 2018
Excellent

meganmoser117

  • Member
  • Posts: 303
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Sildenafil (Viagra®) has two actions that may be of consequence in patients with heart disease. It can lower the blood pressure, and it can interact with nitrates. It should never be used in patients who are taking nitrates.

Did you know?

Certain chemicals, after ingestion, can be converted by the body into cyanide. Most of these chemicals have been removed from the market, but some old nail polish remover, solvents, and plastics manufacturing solutions can contain these substances.

Did you know?

Although puberty usually occurs in the early teenage years, the world's youngest parents were two Chinese children who had their first baby when they were 8 and 9 years of age.

Did you know?

The Centers for Disease Control and Prevention has released reports detailing the deaths of infants (younger than 1 year of age) who died after being given cold and cough medications. This underscores the importance of educating parents that children younger than 2 years of age should never be given over-the-counter cold and cough medications without consulting their physicians.

Did you know?

Anesthesia awareness is a potentially disturbing adverse effect wherein patients who have been paralyzed with muscle relaxants may awaken. They may be aware of their surroundings but unable to communicate or move. Neurologic monitoring equipment that helps to more closely check the patient's anesthesia stages is now available to avoid the occurrence of anesthesia awareness.

Effect of changing a set point for hypothalamic values Effect of changing a set point for hypothalamic values
Your Culture and Your Point of View Your Culture and Your Point of View
3D Plant Layout - Side View for Dual-Stage Pressure Production of Nitric Acid 3D Plant Layout - Side View for Dual-Stage Pressure Production of Nitric Acid
The left-hand rule states that if a coil is grasped with the left hand, the fingers will point in ... The left-hand rule states that if a coil is grasped with the left hand, the fingers will point in ...
If the frequency equals 60 Hz in Figure 10-1, what is the value of capacitance? If the frequency equals 60 Hz in Figure 10-1, what is the value of capacitance?
Constructing a Three-Point Recombination Map Constructing a Three-Point Recombination Map
Video: Structure of a Ribosome

For a complete list of videos, visit our video library