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 109 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

covalentbond

  • Member
  • Posts: 336
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

Did you know?

In most climates, 8 to 10 glasses of water per day is recommended for adults. The best indicator for adequate fluid intake is frequent, clear urination.

Did you know?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

The central dogma of genetics at the molecular level. The central dogma of genetics at the molecular level.
Herbivore biomass is positively correlated with net aboveground primary production. Herbivore biomass is positively correlated with net aboveground primary production.
Diverticula Diverticula are small pouches that can occur along your colon Diverticula Diverticula are small pouches that can occur along your colon
Production and Prices in Richland and Poorland Production and Prices in Richland and Poorland
Four-point scale for grading edema Four-point scale for grading edema
Production of ATP in Skeletal Muscle Production of ATP in Skeletal Muscle
Video: Electrical changes in the heart

For a complete list of videos, visit our video library