Explain the rules for finding maximum profit using total revenue and total cost and marginal revenue and marginal cost
Maximum profit is where total revenue exceeds total cost by the maximum amount. If the firm were to increase output beyond this point, the addition to TC ? MC would exceed the addition to TR ? MR. So the firm should stop once MC catches up to MR. That is, to maximize profit, stop at the output where MR = MC.
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The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of:
A. skill-biased technological change. B. increasing reservation prices. C. the diminishing marginal product of labor. D. globalization.
The primary assets of the Fed are
A) discount loans and reserves. B) discount loans and government securities. C) government securities and reserves. D) discount loans and open market operations.
We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will decrease when
A) supply increases and demand increases. B) supply decreases and demand decreases. C) supply decreases and at the same time demand increases. D) supply increases and at the same time demand decreases.
The law of increasing additional costs is due to
A) government regulations. B) technological improvements. C) the fact that it is more difficult to use resources efficiently the more society produces. D) the fact that resources are not perfectly adaptable for alternative uses.