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:
“I really cannot know whether I am or am not the Genius you are pleased to call me, but I am very willing to put up with the mistake, if it be one. It is a title dearly enough bought by most men, to render it endurable, even when not quite clearly made out, which it never can be till the Posterity, whose decisions are merely dreams to ourselves, has sanctioned or denied it, while it can touch us no further.”
—George Gordon Noel Byron (1788–1824)
“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)
“Most works of art are effectively treated as commodities and most artists, even when they justly claim quite other intentions, are effectively treated as a category of independent craftsmen or skilled workers producing a certain kind of marginal commodity.”
—Raymond Williams (1921–1988)
“When over Catholics the ocean rolls,
They must wait several weeks before a mass
Takes off one peck of purgatorial coals,
Because, till people know what’s come to pass,
They won’t lay out their money on the dead—
It costs three francs for every mass that’s said.”
—George Gordon Noel Byron (1788–1824)