Question and answer
Explained the MC=MR Rule
MR = MC A firm’s profit is defined as its total revenue minus its total cost. In symbols, p (Q) = R(Q) - C(Q). [ A firm that wishes to maximize its profits may find the corresponding output by differentiating p (Q) with respect to output and finding the output that equates the derivative to zero: dp (Q)/dQ = dR(Q)/dQ - dC(Q)/dQ = MR - MC = 0. That is, profit maximization requires that, if the
firm chooses to produce anything at all, it should equate marginal revenue and marginal cost. In the specific case of competitive firms, this takes the form P = MC. The second-order condition is: - PQ* - (FC + VC(Q*)) = p (Q*). Dividing both sides of this inequality by Q* and rearranging, the firm maximizes profit at Q = 0 if and only if P < , that is, if and only if the firm’s price is less than its average variable cost at the MR = MC output. Since average variable cost is equal to marginal cost at the former’s minimum, we can state the complete short-run profit-maximizing rule as follows: produce at the output for which MR = MC, provided price is greater than minimum average variable cost; otherwise shut down. to understand the formula visit this website ]
Get an answer
Original conversation
User: Identified market structures the MC=MR Rule applies to

User: Explained the MC=MR Rule





Weegy: MR = MC A firm’s profit is defined as its total revenue minus its total cost. In symbols, p (Q) = R(Q) - C(Q). [ A firm that wishes to maximize its profits may find the corresponding output by differentiating p (Q) with respect to output and finding the output that equates the derivative to zero: dp (Q)/dQ = dR(Q)/dQ - dC(Q)/dQ = MR - MC = 0. That is, profit maximization requires that, if the firm chooses to produce anything at all, it should equate marginal revenue and marginal cost. In the specific case of competitive firms, this takes the form P = MC. The second-order condition is: - PQ* - (FC + VC(Q*)) = p (Q*). Dividing both sides of this inequality by Q* and rearranging, the firm maximizes profit at Q = 0 if and only if P < , that is, if and only if the firm’s price is less than its average variable cost at the MR = MC output. Since average variable cost is equal to marginal cost at the former’s minimum, we can state the complete short-run profit-maximizing rule as follows: produce at the output for which MR = MC, provided price is greater than minimum average variable cost; otherwise shut down. to understand the formula visit this website ]
Expert answered|tinkermei|Points 686|

Question
Asked 5/27/2012 9:54:31 AM
0 Answers/Comments
New answers
Rating

There are no new answers.

Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
Questions asked by the same visitor
What is the MC=MR Rule?
Weegy: Marginal Cost (MC): The change in total cost as the output level changes one unit. Marginal Revenue (MR): The change in total revenue from the sale of one additional level of output. (More)
Question
Expert Answered
Asked 5/27/2012 9:42:56 AM
0 Answers/Comments
What is the MC=MR Rule? To what market structures does this Rule apply
Weegy: to firms in all types of industries (More)
Question
Expert Answered
Asked 5/27/2012 9:52:58 AM
0 Answers/Comments
17,874,104 questions answered
Popular Conversations
Choose the product. -7p3(4p2 + 3p - 1)
Weegy: -7p3(4p2 3p - 1) = 7p3 - 84p6. Source: User: Find the quotient. 42j4k2 ÷ (-3j3k) Weegy: = 42j k /- 3j k) = ...
10/19/2014 5:43:50 PM| 3 Answers
Describe the key differences between managing and leading.
Weegy: ]
10/19/2014 5:51:01 PM| 3 Answers
During what war did Anne Frank live?
10/19/2014 12:11:03 AM| 1 Answers
Weegy Stuff
S
L
1
1
1
1
L
1
L
Points 2061 [Total 14436]| Ratings 0| Comments 2061| Invitations 0|Offline
S
L
1
L
P
C
1
P
C
1
L
Points 1369 [Total 10850]| Ratings 3| Comments 1339| Invitations 0|Online
S
1
L
1
L
P
P
L
Points 704 [Total 12933]| Ratings 0| Comments 704| Invitations 0|Offline
S
L
Points 423 [Total 1822]| Ratings 0| Comments 423| Invitations 0|Offline
S
1
L
L
Points 417 [Total 6211]| Ratings 3| Comments 387| Invitations 0|Online
S
Points 328 [Total 328]| Ratings 0| Comments 298| Invitations 3|Offline
S
Points 240 [Total 241]| Ratings 2| Comments 220| Invitations 0|Offline
S
Points 125 [Total 125]| Ratings 1| Comments 115| Invitations 0|Offline
S
P
C
L
P
L
1
Points 43 [Total 6277]| Ratings 0| Comments 43| Invitations 0|Offline
S
Points 27 [Total 27]| Ratings 0| Comments 27| Invitations 0|Offline
Home | Contact | Blog | About | Terms | Privacy | Social | ©2014 Purple Inc.