Profit Maximizing Condition For A Pc Firm Essay

1947 Words Nov 25th, 2014 8 Pages
1. What is the profit maximizing condition for a PC firm?

The profit maximizing condition for a PC firm is by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost. To have an equal marginal cost and marginal revenue, consider the effect on a producer’s profit of increasing output by one unit.

2. What is the profit maximizing condition for a monopolist?

The profit maximizing condition for a monopolist is that it’s the sole supplier of it’s good. The demand curve is the market demand curve that slopes downward. The downward slope created a wedge between the price of the good and the marginal revenue of the good. The change in revenue is generated by producing one more unit.

3. List the conditions necessary for Perfect Competition.

The conditions listed for perfect competition is that for an industry to be perfectly competitive, it has to contain many producers, none with a large market share. Second, the industry can be perfectly competitive only if the consumers regard the products of all producers as equivalent.

4. Define marginal revenue (MR)

Marginal revenue is the change in total revenue generated by an additional unit of output. Marginal revenue is calculated by dividing the change in total revenue by the change in output quantity.

5. Define marginal cost (MC)

Marginal cost is the additional cost incurred by producing one more unit of that good or service. They are variable costs…

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