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What is marginal-cost pricing

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Reference no: EM132405915

  1. What is marginal-cost pricing? Why would we expect perfectly-competitive firms to employ it?
  2. Firms maximize profits when they produce the quantity for which marginal revenue (MR) is equal to marginal cost (MC). Explain why. What should the firm do when MC is greater than MR?
  3. Will a perfectly competitive market display both productive efficiency and allocative efficiency? Explain your answer.
  4. Explain the difference between a legal monopoly and a natural monopoly. Give an example of each from the US economy.
  5. Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?

Reference no: EM132405915

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