Profit maximization
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Profit maximization
Learn how firms maximize profit by producing a quantity where marginal cost equals marginal revenue. In a competitive market, firms are price-takers, and marginal revenue is constant. Rational firms will produce more if marginal revenue is higher than marginal cost. Profit is maximized when the area of the rectangle formed by average total cost ...
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For students who like calculus: You can show the condition for profit maximization easily using calculus. Define T P(q)= total profits, T C(q)= total costs, and T R(q)= total revenues. Marginal this-or-that is the derivative of this-or-that with respect to output, so d T R / d q=T R^'(q)=M R= marginal revenue. a. Explain why T P=T R-T C b. Show that a maximum of the profit function comes where T C^'(q)=T R^'(q) . Interpret this finding. | Numerade
For students who like calculus: You can show the condition for profit maximization easily using calculus. Define T P(q)= total profits, T C(q)= total costs, and T R(q)= total revenues. Marginal this-or-that is the derivative of this-or-that with respect to output, so d T R / d q=T R^'(q)=M R= marginal revenue. a. Explain why T P=T R-T C b. Show that a maximum of the profit function comes where T C^'(q)=T R^'(q) . Interpret this finding. | Numerade
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SOLVED: A firm has the following total-cost and total revenue functions. What is the profit-maximizing level of output (Q*)? € = 1/3Q^3 7Q^2 111Q 50, R = 100Q, Q > 0. a. 3 b. 17 c. 11 d. 19.3
SOLVED: A firm has the following total-cost and total revenue functions. What is the profit-maximizing level of output (Q*)? € = 1/3Q^3 7Q^2 111Q 50, R = 100Q, Q > 0. a. 3 b. 17 c. 11 d. 19.3
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For students who like calculus: You can show the condition for profit maximization easily using calculus. Define T P(q)= total profits, T C(q)= total costs, and T R(q)= total revenues. Marginal this-or-that is the derivative of this-or-that with respect to output, so d T R / d q=T R^'(q)=M R= marginal revenue. a. Explain why T P=T R-T C b. Show that a maximum of the profit function comes where T C^'(q)=T R^'(q) . Interpret this finding. | Numerade
For students who like calculus: You can show the condition for profit …
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numerade.com
SOLVED: A firm has the following total-cost and total revenue functions. What is the profit-maximizing level of output (Q*)? € = 1/3Q^3 7Q^2 111Q 50, R = 100Q, Q > 0. a. 3 b. 17 c. 11 d. 19.3
SOLVED: A firm has the following total-cost and total revenue functi…
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SOLVED:At its best possible output level, a firm has total revenue of 3,500 per day and total cost of 7,000 per day. What should this firm do in the short run if: a. the firm has total fixed costs of 3,000 per day? b. the firm has total variable costs of 3,000 per day?
SOLVED:At its best possible output level, a firm has total revenue of 3,…
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