Principles of Microeconomics / Unit 17 MIC 1621 short lesson, about 20 seconds
The Price Taker and the Marginal Rule
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The idea
A competitive firm takes the market price, so marginal revenue equals price and its demand is flat. It produces where marginal revenue equals marginal cost. The rule holds for every firm; only marginal revenue differs.
In practice
At twelve dollars, produce every unit costing twelve or less at the margin.
Where people slip
The crossing that counts is where marginal cost rises through marginal revenue.
Your place on the trail
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