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 99 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
YES! Correct, THANKS for helping me on my review

irishcancer18

  • Member
  • Posts: 310
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Did you know?

The familiar sounds of your heart are made by the heart's valves as they open and close.

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?

Most childhood vaccines are 90–99% effective in preventing disease. Side effects are rarely serious.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

Development of an atherosclerotic plaque that progressively narrows the lumen of an artery to the po Development of an atherosclerotic plaque that progressively narrows the lumen of an artery to the po
Upper-Level Maps Upper-Level Maps
Production of monoclonal antibodies Production of monoclonal antibodies
Fossil fuels production Fossil fuels production
Point of Intersection of 2 Circles Point of Intersection of 2 Circles
A company that sells sweatshirts finds that the profit can be modelled by P(s)= ... A company that sells sweatshirts finds that the profit can be modelled by P(s)= ...
Video: The Lagging Strand in DNA Replication and Replication in Action

For a complete list of videos, visit our video library