Decisions Taken Based On Marginal Costs
In perfectly competitive markets, firms decide the quantity to be produced based on marginal costs and sale price. If the sale price is higher than the marginal cost, then they supply the unit and sell it. If the marginal cost is higher than the price, it would not be profitable to produce it. So the production will be carried out until the marginal cost is equal to the sale price. In other words, firms refuse to sell if the marginal cost is higher than the market price.
Read more about this topic: Marginal Cost
Famous quotes containing the words decisions, based, marginal and/or costs:
“There is an enormous chasm between the relatively rich and powerful people who make decisions in government, business, and finance and our poorer neighbors who must depend on these decisions to alleviate the problems caused by their lack of power and influence.”
—Jimmy Carter (James Earl Carter, Jr.)
“In tennis, at the end of the day you’re a winner or a loser. You know exactly where you stand.... I don’t need that anymore. I don’t need my happiness, my well-being, to be based on winning and losing.”
—Chris Evert (b. 1954)
“In realms of knowledge, we bequeath our books,
And woe pursue who to a master quotes
The funnier of our witty marginal notes.”
—Philip Larkin (1922–1986)
“It costs more to maintain ten vices than one virtue.”
—H.L. (Henry Lewis)