A Y U S H A Y U R V D A en

### profit maximization using total cost and total revenue curves

\n

Total profit equals total revenue minus total cost, or

\n \n

Total profit is maximized at the output level where the difference between total revenue and total cost is greatest. The common rule for profit maximization is that firms should be able to produce enough goods and services to increase the marginal revenue. So, the objective of these firms is to choose an output level to maximize profits. If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge? Classical economists assume the same. E Assume that the market for frying pans is a competitive market, and the market price is \$25 per frying pan. in You have been hired as a consultant for XYZ production company which produces exercise equipment. q=10-4P/3 It begins to fall after crossing the point Q1 as MC > MR. Does maximizing profit (producing where MR = MC) imply an actual economic profit? QUANTITY DEMANDED Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. 40 O 35 Marginal Revenue 30 25Marginal Cost COSTS AND REVENUE(Dollars per s rt) 20 15 10 5 C) Dmitris profit is maximized when he produces _______s rts. Why do you think the problems with the infant industry argument are criticized by many economists? m f2 10 ii) Consumer should always be, A:A country's overall economic activity is gauged by its gross domestic product (GDP). In the illustration, total fixed cost corresponds to the point where the total cost curve intersects the vertical axis at TFC.

\n

As the quantity of output produced increases, total cost increases at a decreasing rate. cardigan (the rst cardigan beyond the profit maximizing quantity) is- an amount V than the price received for each cardigan they sell. Hilary's profit is maximized when she produces C] shirts. It means that the marginal revenue decreases with an increase in the production of goods by an extra amount. The following graph shows Hilary's total cost curve. Given the exclusive franchise offered by the local government, Giant is the monopoly of local delivery services in town. Because Hilary is a price taker, this Assume that the market for s rts is a competitive market, and the market price is \$20 per s rt. Suppose Lorenzo runs a small business that manufactures frying pans. increasing output of, A:Opportunity cost: In perfect competition, TR is linear with a slope equal to the market determined price. The key is that this new, lower price is between the average total cost curve and the average variable cost curve. The following graph shows Amari's total cost curve. Fusce dui lectus, congue vel laoreet ac, dictum vitae o

Please purchase a subscription to get our verified Expert's Answer. maximizing quantity corresponds to the intersection of the V curves. Therefore, Charles's profit-maximizing quantity corresponds to the intersection of the .(total revenue and profit, total cost and profit, total cost and total revenue, marginal revenue, marginal cost and marginal revenue and marginal cost and total revenue) curves. Because your firm is a price taker in perfect competition, the slope of the total revenue function is a constant and corresponds to the market-determined price.

\n \n

Total cost has two components total fixed cost and total variable cost. \"https://sb\" : \"http://b\") + \".scorecardresearch.com/beacon.js\";el.parentNode.insertBefore(s, el);})();\r\n","enabled":true},{"pages":["all"],"location":"footer","script":"\r\n