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Elden [556K]
3 years ago
8

In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to:

Business
1 answer:
shepuryov [24]3 years ago
8 0

Answer:

2. marginal revenue.

Explanation:

Marginal cost is the extra expense incurred as a result of or producing or selling an additional unit. For a profit-maximizing firm, marginal cost is important as it indicates the point at which production should stop.

Marginal revenue is the income generated by the sale of an extra unit. If the marginal revenue is greater than the marginal cost, a firm will make profits if it produces and sells an extra unit.

A profit-maximizing firm should continue production until the marginal cost equal to marginal revenue. The cost associated with producing the last item should match the income from that item. Further production will result in a loss.

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An employer hiring in a competitive labor market should hire additional labor as long as the marginal revenue product (MRP) exceeds the wage rate.

Marginal revenue product (MRP), also called the marginal fee product, is the marginal sales created due to an addition of 1 unit of resource. The marginal sales product is calculated via multiplying the marginal physical product (MPP) of the useful resource through the marginal sales (MR) generated.

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The marginal revenue product fabricated from a worker is equal to the fabricated from the marginal fabricated from exertions (MPL) and the marginal revenue (MR) of output, given with the aid of MR×MPL = MRPL.

Why is marginal revenue product vital?

Marginal revenue product (MRP) explains the additional revenue generated by means of adding an additional unit of manufacturing resource. it's miles an important idea for determining the demand for inputs of production and analyzing the most advantageous amount of a useful resource.

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2 years ago
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daser333 [38]

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