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Unformatted text preview: revenue marginal cost. Once the profit maximizing output quantity has been determined with the help of the MR = MC rule, it is easy to find the profit maximizing price with the help of the demand curve. just use that curve to find out what price the optimal quantity will be demanded. If a decision is to be made about the quantity of some variable, then to maximize [net benefit = total benefit total cost], the decision maker must select a value of the variable at which [marginal benefit = (approximately) marginal cost] When a firms fixed cost increases, its profit maximizing price and output stays the same, so long as it pays to stay in business. This is because the fixed costs just move the Profit Possibilities Curve down. Profit just goes down....
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This note was uploaded on 04/07/2008 for the course AREC 202 taught by Professor Dalstead during the Spring '08 term at Colorado State.
- Spring '08