Loss at the point of equilibrium, Managerial Economics

Assignment Help:

Q. Loss at the point of equilibrium?

Losses: At the point of equilibrium i.e. E where MR = MC, firm produces OM amount of the output. To produce this output, firm incurs an average cost of PF whereas it earns average revenue that is equal to ME. Because at equilibrium MF > ME, (AR

1473_Loss at the point of equilibrium.png

Figure: Losses

In-spite of incurring loss, firm could continue its functioning because it's Average Variable Cost is being covered. At output OM, firm covers its AVC that is equal to MG. Therefore as long as the firm is recovering at least its AVC, it would be possible for this firm to continue functioning.


Related Discussions:- Loss at the point of equilibrium

Describe MRPL and profit maximisation, Q. Describe MRPL and profit maximisa...

Q. Describe MRPL and profit maximisation? The common rule is that firm maximises profit by producing that quantity of output where marginal revenue equals marginal costs. Profi

Types of income elasticity of demand, Types of Income Elasticity of demand ...

Types of Income Elasticity of demand Depending upon the product, demand might increase or decrease in response to a rise in income.  There are thus five types of income Elasti

Advantages of planned economy, Advantages of Planned System i)   Uses...

Advantages of Planned System i)   Uses of resources :  Central planning can lead to the full use of all the factors of production, so reducing or ending unemployment. ii

Factors responsible for wage differential between occupation, FACTORS RESPO...

FACTORS RESPONSIBLE FOR WAGE DIFFERENTIALS BETWEEN OCCUPATIONS The major cause is demand and supply for the particular labour concerned, but other causes could be: i.

Attributes in designing a good tax system, Question: a. What are the b...

Question: a. What are the basic attributes in designing a good tax system? b. Explain briefly how tax systems affect economic efficiency. c. The trade unionists advocat

Effects of delegating monetary policy, Question: (a) Under what condit...

Question: (a) Under what conditions would a central bank be considered independent. (b) Discuss the effects of delegating monetary policy making to an independent agent on

Consumer welfare, '' monopoly is good for consumer welfare" is this crrect

'' monopoly is good for consumer welfare" is this crrect

Projection method of demand forecasting, Explain trend projection method of...

Explain trend projection method of demand forecasting with illustration.

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