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:
“What causes adolescents to rebel is not the assertion of authority but the arbitrary use of power, with little explanation of the rules and no involvement in decision-making. . . . Involving the adolescent in decisions doesnt mean that you are giving up your authority. It means acknowledging that the teenager is growing up and has the right to participate in decisions that affect his or her life.”
—Laurence Steinberg (20th century)
“The trouble with this country is that there are too many politicians who believe, with a conviction based on experience, that you can fool all of the people all of the time.”
—Franklin Pierce Adams (18811960)
“Of course Im a black writer.... Im not just a black writer, but categories like black writer, woman writer and Latin American writer arent marginal anymore. We have to acknowledge that the thing we call literature is more pluralistic now, just as society ought to be. The melting pot never worked. We ought to be able to accept on equal terms everybody from the Hassidim to Walter Lippmann, from the Rastafarians to Ralph Bunche.”
—Toni Morrison (b. 1931)
“It costs more to maintain ten vices than one virtue.”
—H.L. (Henry Lewis)