Module 25 - varies The price-taking output rule says that...

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Module 25 - Microeconomics Maximizing Profit - TR = P*Q - Profit = TR – TC Marginal Revenue is the change in total revenue generated by an additional unit of output. - Marginal Revenue = change in total revenue/ change in output The optimal output rule says that profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to its marginal revenue. The firm’s optimal output rule says that a firm’s profit is maximized by producing the quantity of output at which the marginal cost of the last unit produced is equal to the market price The marginal revenue curve shows how marginal revenue caries as output
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Unformatted text preview: varies. The price-taking output rule says that proft is maximized by producing the quantity oF output at which is equal to the market price. -IF TR>TC, the frm is proftable.-IF TR = TC the frm breaks even .-IF TR < TC, then the frm incurs a loss . The break-even price oF a price-taking frm is the market price at which it earns zero profts. Whenever market price exceeds minimum average total cost, the producer is proftable. Whenever the market price equals minimum average total cost, the producer breaks even . Whenever market price is less than minimum average total cost, the producer is unproftable....
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