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Does Price Signal Quality? Strategic Implications AgEcon Search Ageconsearch Umn  Form

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the opposite of price taking would be price searching and it's more like what we talked about last time the firm is searching for a price that maximizes profits so in this case where we have a downward sloping demand curve not only for the market but also for the individual firm this firm would be classified as a price searcher because what they're doing is they're trying to find the combination of price and quantity that maximizes total revenue and therefore total profit in this situation however marginal revenue is actually going to be less than price okay so marginal revenue will be less than price and so here the only identity that holds is going to be that price is equal to marginal cost why would revenue be less than price or more specifically why would marginal revenue be less than the price let's do a quick example let's say here that the price we're charging is 10 and the quantity we get is one okay so if the price is equal to 10 then the total revenue would be equal well to 1

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