« previous next »

Author Question: Why does a firm in perfect competition produce the quantity at which marginal cost equals price? ... (Read 63 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
on: Jun 29, 2018
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
Reply #1 on: Jun 29, 2018
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
« previous next »
 

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

Did you know?

Limit intake of red meat and dairy products made with whole milk. Choose skim milk, low-fat or fat-free dairy products. Limit fried food. Use healthy oils when cooking.

Did you know?

Essential fatty acids have been shown to be effective against ulcers, asthma, dental cavities, and skin disorders such as acne.

Did you know?

Pregnant women usually experience a heightened sense of smell beginning late in the first trimester. Some experts call this the body's way of protecting a pregnant woman from foods that are unsafe for the fetus.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

The frequency of competition according to the number of species involved. The frequency of competition according to the number of species involved.
How to factor a perfect square trinomial How to factor a perfect square trinomial
Hydrogen burns to produce energy and water Hydrogen burns to produce energy and water
Biking competition in the park Biking competition in the park
Find the factor demand for labour and the amount of output it will produce. Show all ... Find the factor demand for labour and the amount of output it will produce. Show all ...
The price of rice in a small country is currently $6 per pound. In order to help low-income ... The price of rice in a small country is currently $6 per pound. In order to help low-income ...
Video: Spinal Cord Injury Animation

For a complete list of videos, visit our video library