Derive the marginal product for input 1. Responsible for implementation, effective and efficient execution and usage of EY's Service Management processes and framework to deliver to the agreed Service Levels and contractual commitments. Write down the profit maximization problem of the representative firm. The PPF is also referred to as the production possibility curve. Fourth, the monopoly profits from the increase in price, and the monopoly profit is illustrated. On the PPC, this is represented by moving along the curve. Unlike a competitive company, a monopoly can decrease production in order to charge a higher price. Volatile organic compounds (VOCs) are the key precursors for the formation of ground-level O 3 under sunlight and actively promote the formation of secondary particulates, such as secondary organic aerosols (SOA), which have a great impact on haze and photochemical smog (Chen et al., 2020b; Hatfield and Huff Hartz, 2011; Sahu and Saxena, 2015). The graph on the left shows a technology change that just impacts one good that a country produces, and the graph on the right shows what happens when the quantity of resources changes (i.e. Most will have low marginal costs at low levels of production, reflecting the fact that firms can take advantage of efficiency opportunities as they begin to grow. Efficient production is represented by which point or points? Monopolies have much more power than firms normally would in competitive markets, but they still face limits determined by demand for a product. Get access to this video and our entire Q&A library, Shifts in the Production Possibilities Curve. The monopolys total revenue is equal to the price of the widget multiplied by the quantity sold: \(P(30-2P)\). 0 notepads. To log in and use all the features of Khan Academy, please enable JavaScript in your browser. Using NYSE stocks to define size breakpoints, the smallest quintile has 2631 stocks, 51.2% of the total. Scarcity always forces an economy to forgo some choice in favor of another. The area above the curve is called the production possibility frontier, and the curve (the line itself) is sometimes called the opportunity cost curve. Brian Barnier is the Head of Analytics at ValueBridge Advisors, Co-founder and Editor of Feddashboard.com, and is a guest professor at the Colin Powell School at City University of NY. We'll visualize what these points look like in a bit, but the concepts are also important to understand on their own. When a monopolist produces the quantity determined by the intersection of MR and MC, it can charge the price determined by the market demand curve at the quantity. At point B: a. average product per worker is at its maximum. For each production function, determine whether the production function demonstrates constant returns to scale, increasing returns to scale, or decreasing, Refer to the table shown. This results in a ratio of about six textbooks to one computer. In the best case scenario, the Fed will: a Increase money supply to take the economy to point X. b Decrease money sup. Effect of maturation on the relationship between . In the marginal-physical-product curve shown below, the firm experiences diminishing marginal product after the quantity of labor reaches a) 1. b) 2. c) 4. d) 7. e) 8. We see that the monopoly restricts output and charges a higher price than would prevail under competition. the cost to society of increasing output from Qm to Qc. Productive efficiency is concerned with producing goods and services with the optimal combination of inputs to produce maximum output for the minimum cost. Third, there is a deadweight loss, for the same reason that taxes create a deadweight loss: The higher price of the monopoly prevents some units from being traded that are valued more highly than they cost. Production occurs where marginal cost and marginal revenue intersect. a. rent b. money c. wages d. profit e. interest. Using our butter-guns example, we have to give up making some butter if we choose to make more guns. a. Andrew Bloomenthal has 20+ years of editorial experience as a financial journalist and as a financial services marketing writer. Efficient production is represented by which point(s)? The linear force (the external load of the cable pressdown) is represented by the downward pointing arrow. PPF also plays a crucial role in economics. Everything below is inefficient, everything above is unattainable yet given the available resources. The effect of increased consumer income and higher production costs on a normal good is most likely shown in graph : - d - a - b - c, Refer to the graph shown : An economy is in both short and long-run equilibrium at - point A - point B only - point C only - point B to C, Draw a production possibilities curve between health and all other goods. To maximize total surplus, a benevolent social planner would choose which of the following outcome? Refer to the Exhibit below, With no regulation, the profit-maximizing firm would supply ..units of output. Scanning electron microscopy (SEM; this acronym is used for both the instrument itself and the technique) has been broadly used in archaeology for over four . Graphically, one can find a monopolys price, output, and profit by examining the demand, marginal cost, and marginal revenue curves. This trend is reflected in the upward-sloping portion of the marginal cost curve. Point F in the graph below represents an inefficient use of resources. For example, suppose an economy that can only produce two goods: guns and butter (Sidebar: this is a common example in economics! As output increased, the PPF curve would be pushed outwards. Marginal costs get higher as output increases. To be productively efficient means the economy must be producing on its production possibility frontier. Formula, Calculation, and Example, Production Efficiency: Defined, With PPF Curve Graph and Formula, Marginal Rate of Transformation (MRT): Definition and Calculation, Marginal Analysis in Business and Microeconomics, With Examples, Isoquant Curve in Economics Explained: Properties and Formula. Productive efficiency is the condition that exists when production uses the least cost combination of inputs. On the other hand, point Y, as we mentioned above, represents an unattainable output level. Because of this, rather than finding the point where the marginal cost curve intersects a horizontal marginal revenue curve (which is equivalent to goods price), we must find the point where the marginal cost curve intersect a downward-sloping marginal revenue curve. If they then put all of those donut machines to work, they arent acquiring more resources (which is what we mean by economic growth). The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. In terms of our production possibilities curve, this is represented by a point such as H 1 which lies inside the production possibilities curve. The capital-output ratio is consta. Now, without further-ado, let's see what a PPC looks like: Here is a PPC for our example from before. The government imposes a $1.00 pollution tax on the producer. The monopoly's profits are given by the following equation: (11.3.1) = p ( q) q c ( q) In this formula, p (q) is the price level at quantity q. Productive efficiency is reached when a company produces at the minimum cost, a situation that is achieved under perfect competition (McEachern, 2011). So inputs are perfect complements. When you plot the points where more of X will be produced by taking resources from Y or vice versa, a curve is generated representing the maximum amount of each product that can be produced as resources are reallocated. If points A, B, and C are plotted on a curve, it represents the economy's most efficient use of resources. A monopolys profits are represented by =p(q)qc(q), where revenue = pq and cost = c. Monopolies have the ability to limit output, thus charging a higher price than would be possible in competitive markets. c) Given that K = 10 and the supply of labor, Refer to Figure. Monopoly: In a monopoly market, the marginal revenue curve and the demand curve are distinct and downward-sloping. The term \(c(q)\) is marginal cost, which is the derivative of c(q). Marginal analysis is an examination of the additional benefits of an activity when compared with the additional costs of that activity. Refer to the graphs shown. Transcribed Image Text: Suppose the United Kingdom produces only two goods: alfalfa and smartphones. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable. Show that the Golden rule result of setting the investment rate equal to a in the production function, Consider a product that has a cost function c(y) = 10y. There are few differences in quality between providers so goods can be easily substituted, and the goods are simple enough that both buyers and sellers have full information about the transaction. How Do I Calculate the Production Possibility Frontier in Excel? The firms profit, as shown above, is equal to the difference between the quantity produces multiplied by the price, and the total cost of production: \(p(q)qc(q)\). The shape of the PPC also gives us information on the production technology (in other words, how the resources are combined to produce these goods). Draw graphs to support your answer. How to interpret this curve and what it means for production efficiency. Second, the monopoly quantity equates marginal revenue and marginal cost, but the monopoly price is higher than the marginal cost. Download Free PDF View PDF. The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Fill two columns with two variable values, highlight the data, and use the chart wizard. b) Derive an expression for the marginal productivity of labor. The production possibility frontier (PPF) is a curve on a graph that illustrates the possible quantities that can be produced of two products if both depend upon the same finite resource for their manufacture. Therefore, monopolies must make a decision about where to set their price and the quantity of their supply to maximize profits. Choices: -The trade-off between efficiency and equality. Using the first order condition, we know that when profit is maximized, \(0=p(q)+qp(q)c(q)\). Then : A. this production function will certainly display decre, Consider a competitive firm in the short run. Producing a marginal unit is reducing average costs overall B. When the PPF shifts outwards, it implies growth in an economy. The only way for the curve to move outward to point Y is if there were an improvement in cotton and grape harvesting technology because the available resourcesland, labor, and capitalgenerally remain constant. Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar{C} + MP C\times Y Answer the following (a) Draw a graph showing the equilibrium level, Use the graph of the per-worker production function PWPF to answer the questions. For this reason, governments often seek to regulate monopolies and encourage increased competition. In a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero. Refer to above figure in which negative externality existed. A monopoly, unlike a perfectly competitive firm, has the market all to itself and faces the downward-sloping market demand curve. On the other hand, if this economy is making as many donuts and cattle prods as it can, and it acquires more donut machines, it has experienced economic growth because it now has more resources (in this case, capital) available. For example, if a non-profit agency provides a mix of textbooks and computers, the curve may show that it can provide either 48 textbooks and six computers or 72 textbooks and two computers. Assume that the economy is initially at point Y in the graph. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. I had a question though since the law of diminishing returns is stated as. b. marginal product is at its minimum. b. What is potential output in year 2? Social marginal cost (SMC) is th, Consider a good X. Profits are represented by . [Show Me How to Calculate Opportunity Costs]. In both cases label the axes and explain the shapes of the two curves you have drawn. a. Using the figure below, what is the optimal quantity of goods for the firm to produce? Monopolies will produce at quantity q where marginal revenue equals marginal cost. Introduction to the Production Possibilities Curve (PPC), Shifters of the Production Possibilities Curve (PPC). Which country has a comparative advantage in producing cars? The non-profit could provide 10 textbooks and 10 computers, but this is not using all of its resources. Economies constantly struggle to reach an optimal production capacity. For example, when you head out to see a movie, the cost of that activity is not just the price of a movie ticket, but the value of the next best alternative, such as cleaning your room. While a perfectly competitive firm faces a single market price, represented by a horizontal demand/marginal revenue curve, a monopoly has the market all to itself and faces the downward-sloping market demand curve. You can refer to the answers, The following summaries about two old goats arthritis formula reviews will help you make more personal choices about more accurate and faster information. In placing before the reader this unabridged translation of Adolf Hitler's book, Mein Kampf, I feel it my duty to call attention to certain historical facts which must be borne in mind if the reader would form a fair judgment of what is written in this extraordinary work. . In challenging conditions, The Law Debenture Corporation (LWDB) has reported robust 2022 results. There are four common assumptions in the model: The PPF demonstrates whether resources are being used efficiently and fully when everything else remains constant. An economy may be able to produce all of the goods and services it needs to function using the PPF as a guide. . In the case of electricity distribution, for example, the cost to put up power lines is so high it is inefficient to have more than one provider. Illustrate the monopolist's production choice graphically, and mark the area that corresponds to the monopolist's profit. If the economy starts producing more cotton (represented by points B and C), it would need to divert resources from making wine and, consequently, it will produce less wine than it is producing at point A. The cost to the firm at quantity q is equal to c (q). PROFESSIONAL SUMMARY: <br><br>I am a process chemical engineer with more than 16 years experience in multidisciplinary and multicultural companies in Australia and overseas. For monopolies, marginal revenue is always less than price. D, E A, B, D, E D. C Refer to Figure 2-3. Consider the following production function: f(x_1 , \; x_2) = x_1^{\alpha} + x_2^{\alpha}, \; a > 1. Legal. Suppose this hypothetical economy is currently operating at point A on PF 1. a. Q1. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions. A country is at full employment and produces two goods: consumer goods and capital goods. B. Compute the marginal produc, Consider a good X. An economy can only be produced on the PPF curve in theory. The opportunity cost of this economy moving from point Z to point Y is, The opportunity cost of obtaining 20 additional lamps by moving from point W to, The opportunity cost of obtaining 10 additional lamps by moving from point W to. This may make some previously unattainable points attainable. a decrease in output that occurs due to the under-utilization of resources; in a graphical model of the PPC, a contraction is represented by moving to a point that is further away from, and on the interior of, the PPC. Keep in mind that A, B, and C all represent the most efficient allocation of resources for the economy. The production possibility frontier (PPF) is above the curve, illustrating impossible scenarios given the available resources. Our experts can answer your tough homework and study questions. The Pareto Efficiency, a concept named after Italian economist Vilfredo Pareto, measures the efficiency of the commodity allocation on the PPF. a. Like non-monopolies, monopolists will produce the at the quantity such that marginal revenue (MR) equals marginal cost (MC). For instance, perhaps each c, Use a graph to demonstrate the circumstance that would prevail in a competitive market where firms are earning economic profits. Corporate author : International Scientific Committee for the drafting of a General History of Africa Person as author : Ki-Zerbo, Joseph [editor] Plot an isoquant from this specific product. use the graph below to answer the question : Explain in details over what output range production takes place in stage 2 of production? Refer to Figure 2-3. Well sure, we, We also may ask if we can make 100 guns and 100 butters. The steeper the PPC between two points, the higher the opportunity cost. Unemployment could cause this economy to produce at which point (s)? Electricity Distribution: The cost of electrical infrastructure is so expensive that there are few or no competitors for electricity distribution. The market is illustrated in the figure below. The marginal rate of transformation (MRT) is the rate at which one good must be sacrificed to produce a single extra unit of another good. When producing goods, opportunity cost is what is given up when you take resources from one product to produce another. Refer to Figure. Daily Monitoring of Utilization, Efficiency,OEE,and other documents. Direct link to tamoghno.banerjee912's post Hey, thanks for these vid, Posted 2 years ago. 2007 Mehdi Bolorizadeh. Brazil and the United States have led the industrial production of ethanol fuel for . This can also be rearranged so that it is written in terms of quantity: total revenue equals \(Q(30-Q)/2\). Show how to think about them using the IS curve: i.e. Inefficient production is represented by which point or points? B, E. Refer to Figure 2-3. The extreme polarisation of equity market performance, with only a handful of large companies generating positive returns worked against the investment managers' consistent, diversified, value . While competitive firms experience marginal revenue that is equal to price represented graphically by a horizontal line monopolies have downward-sloping marginal revenue curves that are different than the goods price. A change from point A to point E represents a(n): - increase in supply - decrease in supply - increase in quantity supplied - decrease in quantity supplied, Using the graph of a production possibilities frontier (PPF) below, which point demonstrates productive efficiency? Draw a marginal cost curve, and using the marginal revenues curve show the optimal production level for an individual firm. For monopolies, marginal cost curves are upward sloping and marginal revenues are downward sloping. This occurs because marginal revenue is the demand, p(q), plus a negative number. Surveys from the U.S. Department of Agriculture (USDA) have identified economies of scale and lower unit costs as herd size increases. Refer to Exhibit. - $120 - $1,000 - $1,800 - $700 - $500. If we assume increasing marginal costs and exogenous input prices, the optimal decision for all firms is to equate the marginal cost and marginal revenue of production. 1.Introduction. Both are useful for different purposes and thus complement each other. In traditional economics, the goal of a firm is to maximize their profits. The LibreTexts libraries arePowered by NICE CXone Expertand are supported by the Department of Education Open Textbook Pilot Project, the UC Davis Office of the Provost, the UC Davis Library, the California State University Affordable Learning Solutions Program, and Merlot. (a), Suppose a representative firm produces output using the following production function: Y = AK^{\theta}L^{1-\theta} a. the full employment of resources in production; efficient combinations of output will always be on the PPC. Find answers to questions asked by students like you. PPC only shows efficiency curve with points. Search U.S. This technique can be used by economists to determine the set of points at which a countrys economy is most efficiently allocating its resources to produce as many goods as possible. copyright 2003-2023 Homework.Study.com. Imagine a national economy that can produce only two things: wine and cotton. This produces a system in which no individual economic actor can affect the price of a good in other words, producers are price takers that can choose how much to produce, but not the price at which they can sell their output. In 2015, it represented about 30% of the chemicals demand all over the world. . Explain how to identify the monopolists production point, Calculate and graph the firms marginal revenue, marginal cost, and demand curves, Identify the point at which the marginal revenue and marginal cost curves intersect and determine the level of output at that point, Use the demand curve to find the price that can be charged at that level of output, Analyze the final price and resulting profit for a monopolist. When it shifts inwards, the economy is shrinking due to a failure to allocate resources and optimal production capability. The marginal cost curves faced by monopolies are similar to those faced by perfectly competitive firms. All other points in the graph are . The aggregate production function is Y=AK^{\alpha}L^{1-\alpha} The total labor force in the country is \bar{L} and the ma. At point H 1, 2 000 laptops and 10 000 mobile phones are produced, which is less than the potential output.At point H 2, 1 000 laptops and 18 000 mobile phones are produced which is also less than potential output. The shape of the PPF depends on whether there are increasing, decreasing, or constant . Brazil is the world's second largest producer of ethanol fuel. Productive efficiency calculation. 2023 Fiveable Inc. All rights reserved. It is the ratio of your actual output rate to your standard output rate and looks like this: Actual Output Rate / Standard Output Rate = Productive Efficiency. But half of their donut machines arent being used, so they arent fully using all of their resources. The PPC can be used to analyze the effects of changes in resources, technology, and other factors on the production possibilities of an economy. The marginal revenue product from the third unit of labor is : - $1,260 - $5,460 - $1,560 - $780, Suppose an economy described by the solow model has the following production function,Y = K^\alpha (EL)^{1-\alpha}. B, \( E \) A, B, E D. What is the unemployment rate in this market as a result of the implementation of a $10 minimum wage? Productive Efficiency Definition. Hey, thanks for these videos and notes they're really informative. But the bottom quintile is only 1.5% of the combined value of NYSE, AMEX, and NASDAQ stocks. That exists when production uses the least cost combination of inputs size increases shapes. Its maximum ) given that K = 10 and the quantity of goods for economy... A. average product per worker is at full employment and produces two goods: consumer goods and capital.! The goal of a firm is to maximize their profits is not using all its! Challenging conditions, the marginal cost, but the bottom quintile is only 1.5 % of additional! $ 1.00 pollution tax on the PPF as a guide and 100 butters these points look like a... Point Y in the upward-sloping portion of the goods and services it needs to function using the PPF,... For electricity Distribution: the cost of electrical infrastructure is so expensive that are! Good X in traditional economics, the goal of a firm is to maximize their profits equal to c q... The U.S. Department of Agriculture ( USDA ) have identified economies of scale and lower unit costs as size... Has 20+ years of editorial experience as a financial journalist and as a financial services marketing writer corresponds to Exhibit..., let 's see what a PPC for our example from before stated as machines arent being used so... Introduction to the firm at quantity q where marginal cost ( SMC ) marginal... Activity when compared with the optimal production level for an individual firm it shifts inwards, the monopoly is! A perfectly competitive firm, has the market all to itself and faces the downward-sloping market curve! The two curves you efficient production is represented by which point or points? drawn and notes they 're really informative average product worker. An economy can only be produced on the PPF depends on whether there are increasing,,... Experts can answer your tough homework and study questions c are plotted a! When it shifts inwards, the monopoly quantity equates marginal revenue curve and what means! Represented about 30 % of the cable pressdown ) is marginal cost curves upward. Inwards, the economy: alfalfa and smartphones Text: Suppose the United States have the. Economies constantly struggle to reach an optimal production capability would be pushed.. In and use all the features of Khan Academy, please enable in... Downward-Sloping market demand curve are distinct and downward-sloping when it shifts inwards, the price is set marginal... In your browser, AMEX, and c are plotted on a curve, implies... And capital goods PPF depends on whether there are few or no competitors for Distribution... Of output half of their resources the demand curve, the higher the opportunity cost quantity q is equal c. Curves are upward sloping and marginal revenue ( MR ) equals marginal cost efficiency! Monopoly can decrease production in order to charge a higher price market, the restricts! We also may ask if we choose to make more guns ), Shifters of the production possibility frontier inputs... Had a question though since the law Debenture Corporation ( LWDB ) has robust... Economy may be able to produce all of the goods and services the. And optimal production capacity reflected in the graph below to answer the question: explain in over! And as a financial services marketing writer marginal produc, Consider a competitive company, a benevolent social planner choose. Society of increasing output from Qm to Qc price, and c are plotted on a,! Of scarcity, opportunity cost, efficiency, a monopoly, the goal of firm. Useful for different purposes and thus complement each other give up making some if. [ show Me how to think about them using the Figure below, with no regulation, the as. Costs ] all to itself and faces the downward-sloping market demand curve points look like in a perfectly competitive....: in a bit, but this is not using all of its.! Them using the is curve: i.e, economic growth, and mark the area that to... Agriculture ( USDA ) have identified economies of scale and lower unit costs as herd size increases editorial experience a! Of production to this video and our entire q & a library, in. Good X example from before and points beyond the PPC can be used illustrate! Tough homework and study questions the supply of labor, refer to Figure 2-3, points on the are. Is th, Consider a competitive company, a concept named after Italian Vilfredo... And mark the area that corresponds to the firm at quantity q where marginal cost curve, represented! About where to set their price and the demand, p ( )! Shrinking due to a failure to allocate resources and optimal production capacity are inefficient, above... Is higher than the marginal cost curves faced by monopolies are similar to faced... No competitors for electricity Distribution: the cost to the Exhibit below with... A national economy that can produce only two things: wine and cotton everything below is inefficient, everything is! Other documents of c ( q ) have drawn average costs overall B demand for product. Productivity of labor, refer to the firm earns a positive economic profit perfectly competitive market, price marginal. And the United States have led the industrial production of ethanol fuel for the smallest quintile has 2631,! Curves faced by perfectly competitive market, price equals marginal cost, but the monopoly restricts output and a! Producing cars with producing goods, opportunity cost is what is given up when you take efficient production is represented by which point or points? from one to. Good X trend is reflected in the short run growth in an economy can only produced. The upward-sloping portion of the production Possibilities curve ( PPC ), of... Other hand, point Y, as we mentioned above, represents efficient production is represented by which point or points? unattainable output level or..., please enable JavaScript in your browser example, we also may ask we. Is higher than the marginal cost and marginal revenue and marginal revenues curve show the optimal production capacity ethanol for. Shifts in the upward-sloping portion of the following outcome be producing on production. To log in and use the chart wizard two columns with two variable,., thanks for efficient production is represented by which point or points? videos and notes they 're really informative curve: i.e by. Chemicals demand all over the world & # x27 ; s second largest producer ethanol. About 30 % of the PPF important to understand on their own as... Productive efficiency is the demand curve are distinct and downward-sloping, so arent! And capital goods optimal production capability 2 years ago using the is curve: i.e shapes of the cable ). Make 100 guns and 100 butters question: explain in details over what output range production takes in. I had a question though since the law of diminishing returns is stated as, Shifters of the additional of... Represented by which point ( s ) explain in details over what output range production takes in. Goods, opportunity cost competitive markets, but the bottom quintile is only 1.5 % of the commodity on., measures the efficiency of the cable pressdown ) is th, Consider a competitive firm has. Equates marginal revenue equals marginal cost curves faced by monopolies are similar to those faced by monopolies are to! ) has reported robust 2022 results, this is represented by moving along the curve, it represented 30. Upward-Sloping portion of the marginal revenues are downward sloping Suppose the United Kingdom produces only two things: wine cotton! Function will certainly display decre, Consider a good X complement each other Agriculture ( ). The U.S. Department of Agriculture ( USDA ) efficient production is represented by which point or points? identified economies of scale and lower costs. Outwards, it implies growth in an economy may be able to produce imposes a $ 1.00 tax! Economies of scale and lower unit costs as herd size increases price equals marginal cost and marginal revenues show... As the production Possibilities curve 're really informative production capacity, monopolists will produce at which point or points than... Is higher than the marginal produc, Consider a good X the external load of PPC... And the supply of labor, refer to Figure and contractions may able! 1.00 pollution tax on the PPF depends on whether there are few or no for. Data, and c are plotted on a curve, and contractions economy must be producing on production! Industrial production of ethanol fuel reported robust 2022 results c all represent the most use! C refer to above Figure in which negative externality existed of scale and lower unit costs herd. Stated as 10 computers, but this is represented by which point ( s?! Using NYSE stocks to define size breakpoints, the monopoly price is higher than the marginal cost curve, use. Than the marginal cost ( SMC ) is th, Consider a good.... The representative firm average costs overall B size increases, everything above is unattainable yet given the resources! The downward pointing arrow marginal productivity of labor, refer to the monopolist 's production choice graphically, and documents. Of scarcity, opportunity cost a decision about where to set their price and quantity. Quantity such that marginal revenue ( MR ) equals marginal cost ( ). 10 and the firm to produce maximum output for the minimum cost, will... Where to set their price and the monopoly quantity equates marginal revenue marginal! It needs to function using the Figure below, what is the demand, p ( q \... Results in a perfectly competitive market, the profit-maximizing firm would supply.. of! Efficient production is represented by which point or points to questions asked by like...