Where does MR = MC rule apply? - ProProfs Discuss
Topics
Products
Follow Us:

Where does MR = MC rule apply?

Where does MR = MC rule apply?

Change Image    Delete



A. Applies only to pure competition.
B. Applies only to pure monopoly.
C. Does not apply to pure monopoly because price exceeds marginal revenue.
D. Applies both to pure monopoly and pure competition.

This question is part of Economics Test I
Asked by Lynz, Last updated: Aug 07, 2020

+ Answer
Request

3 Answers

C. Perez

Just getting better day by day

C. Perez, Writer, Writer, Cleveland

Answered Aug 01, 2019

The correct answer to this question is D, Applies both to pure monopoly and pure competition. MC and MR are abbreviations related to the Profit Maximization Rule formula. The formula is MC = MR, in which MC stands for Marginal Cost.

MR stands for Marginal Revenue. When more units of goods are produced, the costs increases, which is the Marginal Cost. Marginal Revenue is the slop of the Total Revenue. It is when the rate of sales change, causing a change in the Total Revenue. MC = MR can relate to many things like how many times a TV commercial is running, as well as hours of operation.

 

Anika Nicole

Content Writer, Teacher

Anika Nicole, Wordsmith, PG In Journalism, New York

Answered Jun 27, 2018

MR = MC rule applies both to pure monopoly and pure competition. Hence, the correct option is D.

Basically, MC=MR is a profit maximization formula where MC stands forMarginal Cost and MR stands forMarginal Revenue.

This maximization rule simply states that if a firm (type doesn't matter) opts for maximizing its profits, it definitely has to choose such a level of output where Marginal Cost (MC) is equal to Marginal Revenue (MR). And Marginal Cost should be rising. We can also say, MR=MC.

 

John Smith

John Smith

Answered Apr 21, 2017

Applies both to pure monopoly and pure competition.
 

Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer
Search for Google images
Select a recommended image
Upload from your computer

Email Sent
We have sent an email to your address "" with instructions to reset your password.