Marginal analysis

Key Questions

  • Why is it important to review marginal costs and revenues in an analysis?

    Answer:

    MR and MC are used to determine a firm's equilibrium.

    Explanation:

    Whatever be the market form, for a firm to be in equilibrium, the two conditions are to be satisfied.

    1st order condition or necessary condition
    MC = MR

    2nd order condition or sufficient condition
    MC curve must cut the MR curve from below
    (or)
    At the point of equilibrium MC must be on the increase.

    Equilibrium under Perfect Competition
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    Equilibrium Under Monopoly

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    Nallasivam V · 1 · Aug 11 2015

Questions

Basic Economic Concepts