Marginal Revenue/Marginal Cost Flashcards
1
Q
MR = ATC
A
The firm will break even.
2
Q
MR > MC
A
The firm will make a profit.
3
Q
MR=MC
A
The amount received from the last unit sold (MR) EQUALS the incremental MC of providing that unit.
4
Q
MR=MC
A
An additional unit would COST MORE than the revenue it will provide
5
Q
MR=MC
A
An quantity below that level would provide MORE REVENUE than cost.
6
Q
MR < ATC
A
The firm is covering variable costs and some fixed costs but not making a profit.
7
Q
MR
A
The firm is not covering variable costs and will therefore shutdown. The loss increases with every unit produced.
