« previous next »

Author Question: Why does a firm in perfect competition produce the quantity at which marginal cost equals price? ... (Read 75 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?

Asthma cases in Americans are about 75% higher today than they were in 1980.

Did you know?

The toxic levels for lithium carbonate are close to the therapeutic levels. Signs of toxicity include fine hand tremor, polyuria, mild thirst, nausea, general discomfort, diarrhea, vomiting, drowsiness, muscular weakness, lack of coordination, ataxia, giddiness, tinnitus, and blurred vision.

Did you know?

Signs and symptoms that may signify an eye tumor include general blurred vision, bulging eye(s), double vision, a sensation of a foreign body in the eye(s), iris defects, limited ability to move the eyelid(s), limited ability to move the eye(s), pain or discomfort in or around the eyes or eyelids, red or pink eyes, white or cloud spots on the eye(s), colored spots on the eyelid(s), swelling around the eyes, swollen eyelid(s), and general vision loss.

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Did you know?

The average older adult in the United States takes five prescription drugs per day. Half of these drugs contain a sedative. Alcohol should therefore be avoided by most senior citizens because of the dangerous interactions between alcohol and sedatives.

Activating a gene to produce “marathon mice.” Activating a gene to produce “marathon mice.”
Alexander Fleming photographed in his lab where he observed the natural competition between a fungus Alexander Fleming photographed in his lab where he observed the natural competition between a fungus
Cost Savings with an EHR System Cost Savings with an EHR System
Greet a First-Time Client With a Firm Handshake. Greet a First-Time Client With a Firm Handshake.
Typical Startup Cost Categories Cont. Typical Startup Cost Categories Cont.
Farmers’ markets provide fresh, local produce to consumers Farmers’ markets provide fresh, local produce to consumers
Video: Deglutition

For a complete list of videos, visit our video library