Show normal profit equilibrium, Managerial Economics

Assignment Help:

Q. Show Normal profit equilibrium?

Normal Profits: With the condition of  MC = MR and MC cuts the MR from below, if E is the point of stable equilibrium, output of firm is OM. produce this output, firm incurs an average cost ME, whereas it earns average revenue, that is also equal to ME. So, we see that the firm just makes a normal profit - i.e., its AR = AC. Because the total revenue earned and total cost incurred at output OM is OPEM, firm earns a normal profit.

2181_Show Normal profit equilibrium.png

Figure: Normal profit equilibrium


Related Discussions:- Show normal profit equilibrium

Explain about time series analysis, Q. Explain about Time series analysis? ...

Q. Explain about Time series analysis? An analysis of relationship between variables over a period of time. Time-series analysis is helpful in assessing how an economic or othe

Inelastic supply, Inelastic Supply Supply is said to be price inelasti...

Inelastic Supply Supply is said to be price inelastic if changes in price bring about changes in quantity supplied in less proportion.  Thus, when price increases quantity sup

What is the equilibrium in the labor market, What is the equilibrium in the...

What is the equilibrium in the labor market? Explain briefly. Equilibrium in the Labor Market a. The market labor of demand curve is the horizontal total of the individual l

Concepts of elasticities in making decisions, Question 1: "Anyone who i...

Question 1: "Anyone who is willing to learn the language of economics and take the time to practice making decisions can learn to be an effective manager." Explain how. Qu

Perfectly inelastic (zero elastic) supply, Perfectly Inelastic (Zero Elasti...

Perfectly Inelastic (Zero Elastic) Supply Supply is said to be perfectly inelastic if the quantity supplied is constant at all prices.  The supply curve is a vertical straight

Practical importance of knowledge-price elasticity of demand, Practical Imp...

Practical Importance of the knowledge of Price Elasticity of demand The practical importance of the measures of elasticity of demand is to be appreciated in various ways:

Explain the efficiency wage model, Q. Explain the Efficiency wage model? ...

Q. Explain the Efficiency wage model? Efficiency wage models such as Shapiro and Stiglitz (1984) suggest wage rents as an addition to monitoring, because this gives employees a

Government spending multiplier, Now, let's modify our model a bit. Let's ad...

Now, let's modify our model a bit. Let's add a fourth sector of spending so that Y = C + I + G + X n with X = X o and M = M = f (Y). Will this change, by itself, increase, decrea

Disadvantages of product differentiation , Disadvantages of product differe...

Disadvantages of product differentiation   a) Product differentiation generally reduces the degree of competition in the market.  It does this in two ways:          i.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd