Explain why the decision rule MR=MC is true for either the Long or Short run Pro

Question

Explain why the decision rule MR=MC is true for either the Long or Short run Profit Maximization.
Explain why the elasticity of demand for a firm’s product tends to be more elastic than the industry demand. Explain why the decision rule MR=MC is true for either the Long or Short run Profit Maximization.
Explain why the elasticity of demand for a firm’s product tends to be more elastic than the industry demand.
Explain why the elasticity of demand for a firm’s product tends to be more elastic than the industry demand. Explain why the elasticity of demand for a firm’s product tends to be more elastic than the industry demand.

Explanation / Answer

1) MR is the addition in total revenue due to additional unit sold.

MC is the addition in total cost due to additional unit produced.

MR-MC is the addition in total benefit due to additional unit produced and sold. Both in long run whenever MR-MC is positive, it means there is addition to net profit and thus profit is maximised when MR=MC.

2)Elasticity of demand for firm is more elastic because there are more competitive in the industry and due to any price change there will be change in consumer and there will be switch from one firm to another.

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.