For example the productive needs of the firm would be to set (Marginal Revenue = Marginal Costs (MR = MC) and create excess profits for the firm. However, as far as what is in the best interests of society it might be Price or (Average Revenue) = MC. Give the answers of both solutions.
To determine the answers for both solutions, we need to understand the concepts of marginal revenue (MR), marginal costs (MC), average revenue, and prices.
Solution 1: Productive Needs of the Firm
To set MR = MC, the firm aims to maximize its profit. Marginal revenue is the additional revenue generated from selling one more unit of a product, while marginal cost is the additional cost incurred to produce one more unit.
To find the answer:
1. Calculate marginal revenue: Compare the total revenue generated from selling n units with the total revenue generated from selling (n-1) units. The difference between the two is the marginal revenue.
2. Calculate marginal cost: Compare the total cost of producing n units with the total cost of producing (n-1) units. The difference between the two is the marginal cost.
3. Set MR = MC: Equate the calculated marginal revenue with the calculated marginal cost. Solve the equation to find the value of n, which represents the optimal level of production.
Solution 2: Best Interests of Society
To consider the best interests of society, the firm should aim for price or average revenue (AR) = MC. Average revenue is the total revenue divided by the quantity of units sold.
To find the answer:
1. Calculate average revenue: Divide the total revenue by the number of units sold.
2. Calculate marginal cost: Determine the additional cost incurred to produce one more unit.
3. Set AR = MC: Equate the calculated average revenue with the calculated marginal cost. Solve the equation to find the value of n, which represents the optimal level of production.
Please note that the specific numerical values required to find these solutions are not given in your question, so you would need to obtain the values related to revenue and costs from the firm's financial statements or other relevant information.