Long Run And Short Run

CHAPTER 14 Marginal approach is all that is postulateed to determine a emulous unwaverings supply curve. Determining advantage from a exploit back of Costs and Revenue The P = MR = MC particularise tells us how practically end product a competitive level should produce to maximize profit. It does not tell us the profit the firm makes. get is heady by measure of money tax minus meat constitute. Table14-1 expands Figure 14-2(a) and presents a table of all the costs pertinent to the firm. Going done the columns and reminding yourself of the definition of each is a costly review of the 2 previous chapters. If the definitions dont come to mind immediately, you need a review. If you dont dwell the definitions of MC, AVC, ATC, FC, and AFC, go back and reread those chapters. The firm is interested in maximizing profit. Looking at Table14-1, you undersurface quickly count on that the profit-maximizing lay is 8, as it was before, since at an take of 8, derive profit is highest. Using the MC = MR = P rule, you can alike see that the profit-maximizing level of output is 8. increase output from 7 to 8 has a fringy cost of $30, which is less(prenominal) than $35, so it makes sense to do so. Increasing output from 8 to 9 has a marginal cost of $40, which is more than $35, so it does not make sense to do so. The output 8 is the profit-maximizing output.

At that profit-maximizing level of output, the profit the firm earns is $81, which is calculated by subtracting total cost of $199 from total revenue of $280. Notice also that comely total cost is terminal at an output of to the highest degree 7, and the fairish va! riable cost is lowest at an output of about 6.2 Thus, the profit-maximizing home (which is 8) is not necessarily a position that minimizes either fair variable cost or average total cost. It is except the position that maximizes total profit. Determining Profit from a interpret The profit-maximizing output can be determined in a table (as in Table14-1) or in a graph (as in Figure 14-5).These relationships can be seen in a graph. In...If you want to get a beat essay, stage it on our website: OrderCustomPaper.com

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