question archive (a) determined by equating marginal revenue and marginal cost to determine quantity and then setting the price using that quantity and the demand curve
(a) determined by equating marginal revenue and marginal cost to determine quantity and then setting the price using that quantity and the demand curve
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(a) determined by equating marginal revenue and marginal cost to determine quantity and then setting the price using that quantity and the demand curve.
(b) determined by equating average cost and marginal cost to determine quantity and then setting the price using that quantity and the demand curve.
(c) determined by equating marginal revenue and average revenue to determine quantity and then setting the price using that quantity and the demand curve.
(d) determined by equating marginal revenue and long-run average cost to determine quantity and then setting the price using that quantity and the demand curve.
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a. determined by equating marginal revenue and marginal cost to determine quantity and then setting the price using that quantity and the demand curve.Reason: The firm will attain maximum profits if it sets its level of output at the level where the marginal revenue becomes equal to the marginal cost. Usually in case of imperfect market competition, the demand is downward sloping, which makes the price and the marginal revenue vary from each other. In such case, while equality between marginal revenue and marginal cost is used to determine the level of output, the price is determined at a corresponding level in the average revenue curve or demand curve.
