Why do firms likely set their output at P=MC??
What happen if they trying to produce a higher level of output or lower level of output?
2006-09-04 00:24:27 · 5 answers · asked by Tomato 1 in Social Science ➔ Economics
http://www.necanet.org/store/pdf_toc/NECA120_TOC.pdf#search=%22AC%20and%20MC%22
2006-09-04 00:30:53 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Because it is a 'socially optimum price'. To obtain the most efficient allocation of resources the government can impose the legal price of P and let monopolists choose their profit maximising output and the allocative results of pure competition be simulated.
email me back if you cant understand and i'll draw you a graph!
2006-09-04 08:57:24 · answer #2 · answered by bronwynstanton 3 · 0⤊ 0⤋
AC= Average cost
MC=Marginal cost
2006-09-04 08:36:47 · answer #3 · answered by 3mi 2 · 0⤊ 0⤋
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2006-09-04 07:45:29 · answer #4 · answered by the moon 3 · 0⤊ 0⤋
i have not clue.
2006-09-04 14:03:27 · answer #5 · answered by ✠TotalTechMasta✠ 4 · 0⤊ 0⤋