Ag Econ Chapter 8

Ag Econ Chapter 8 - last widget Quality(Q is the maximizing...

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Ag Econ Chapter 8 Total Revenue = price * quantity Avg Revenue = TR/Q = price Marginal revenue = change in Total Revenue/ change in Quantity if the marginal revenue is the same slope is constant, marginal revenue is the slope if we have a curve, marginal revenue will be different at different points Profit is the difference between the total revenue and the total cost profit maximization is the single goal of firms. it is balancing the level of production so that there is a good balance between total revenue and total cost we are not interested in the total profit but the marginal profit we want the total revenue of selling the last widget to be equal to the cost to produce the
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Unformatted text preview: last widget Quality (Q*) is the maximizing quantity law of diminishing margin – after a certain point, everything will go down Fig 4 in chapter 8 of the text when total cost is below total revenue, that is where you want to produce There is a point where you want to produce. That point is where there is the most distance between total revenue and total cost the points where the lines cross, those are break even points, especially where the total cost was higher before that point....
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