Question

if eskom is earning economic profits in the short run. explain using a graph how much output eskom will produce and at what price this output will be sold if eskom maximises ouput

Answer 1

Answer on Question #67745, Economics / Microeconomics

if eskom is earning economic profits in the short run. explain using a graph how much output eskom will produce and at what price this output will be sold if eskom maximises output

ANSWER:

if eskom is earning economic profits in the short run. explain using a graph how much output eskom will produce and at what price this output will be sold if eskom maximises output

The firm should have a level of production where Marginal Costs (MC) are equal to Marginal Revenue (MR) and

And equal to Average Variable costs. So production of more additional unit would have the same costs as revenue it brings. Price should be set accordingly to level of average variable costs.

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