Why is it important to review marginal costs and revenues in an analysis?
MR and MC are used to determine a firm's equilibrium.
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
At the point of equilibrium MC must be on the increase.
Equilibrium under Perfect Competition
Equilibrium Under Monopoly