Q. Explain Supernormal Equilibrium?

Supernormal Equilibrium: E is the point of stable equilibrium as MC = MR and MC cuts the MR from below.  

Figure: Supernormal Equilibrium

This is point the firm produces OM amount of output. To produce this output, firm incurs an average cost of MF, whereas it earns average revenue of ME. Because at equilibrium ME > MF, firm makes a profit of FE per unit of output sold. Again, because the total revenue earned when OM is sold is OPEM and total cost incurred to produce same output is ORFM, total profit earned at that level of output is RPEF.

Posted Date: 8/12/2013 3:17:19 AM | Location : United States

Ask an Expert

Related Discussions:- Explain supernormal equilibrium, Assignment Help, Ask Question on Explain supernormal equilibrium, Get Answer, Expert's Help, Explain supernormal equilibrium Discussions

Write discussion on Explain supernormal equilibrium
Your posts are moderated

Write your message here..

Related Questions

Non-broad-based framework, The greenhouse gas emission is estimated to grow... The greenhouse gas emission is estimated to grow in the medium and long term. In order to minimize the negative effects of global climate change, it is required to stabilize the co

Define concept of managerial decision-making, Define concept of Managerial ... Define concept of Managerial decision-making Managerial decision-making draws on economic concepts as well as techniques and tools of analysis provided by decision sciences. T

Profit Maximization In Various Market Structures, My assignment is listed b... My assignment is listed below, I need to know if you can correctly complete this entire assignment by providing the entire completed, mistake free solution, including providing the

Describe about the theory of profit, Describe about the Theory of profit ... Describe about the Theory of profit Every industrial and business enterprise aims at maximising profit. Profit is the difference between total economic cost and totalrevenue. P

Realism of perfect competition, REALISM OF PERFECT COMPETITION The ass... REALISM OF PERFECT COMPETITION The assumptions of perfect competition are obviously at variance with the conditions which actually exist in real world markets.  Some market

Economics model, discuss baumols dynamic models discuss baumols dynamic models

What is the profit maximising ticket price, A promoter decides to rent an a... A promoter decides to rent an arena for concert. Arena seats 20,000. Rental fee is 10,000. (This is a fixed cost.) The arena owner gets concessions and parking and pays all other e

Causes for diseconomies of scale, Q. Causes for diseconomies of scale? ... Q. Causes for diseconomies of scale? The most significant cause for diseconomies of scale is the diminishing returns to management. As the output grows beyond certain level the

Discuss five negotiation skills of successful negotiators, QUESTION 1 N... QUESTION 1 Negotiating skills remain a critical capability for procurement practitioners. Skilled negotiators have the potential to improve the negotiating outcome. Procurers o

Eceonomic therios, Ask questiHow does economic theory contribute to manager... Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#