Respuesta :
At that time, marginal cost is lower than marginal revenue.
Marginal cost:
- It also goes by the name incremental cost.
- A profit maximizing firm will produce a quantity where marginal cost = marginal revenue[tex](MC = MR)[/tex].
- If MC is greater than MR, then there is more cost than revenue for each additional unit of output, so it should decrease the output till MC = MR.
- On the other hand, if MC is less than MR, there is scope for more output; it can produce more quantity until [tex]MR = MC[/tex].
- In order to determine profitability at various levels of production and sale, marginal costing is useful in profit planning. It is helpful in making decisions on selling price fixation, export decisions, and make or buy decisions. The marginal costing methods of break even analysis and [tex]P/V[/tex] ratio are both effective.
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