At this intersection point on a graph, firms will earn maximum profit, even if this point is under average total cost.
marginal cost of production
profit is maximized
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
A company maximizes profits when marginal revenue equals marginal costs.
marginal cost of production
profit is maximized
Profits are maximized when marginal costs equals marginal revenue because fixed costs are now spread over a larger amount of revenue. This means that total cost per unit declines and profits increase. Another way to say this is that this is the effect of scale. When marginal revenue equals marginal costs, in a growing revenue situation, you gain economies of scale and higher profits.
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
A company maximizes profits when marginal revenue equals marginal costs.
The level of output every first strives for is when marginal revenue equals marginal cost.
The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.
A monopolist will set production at a level where marginal cost is equal to marginal revenue.
If the firm operates in a perfectly competitive industry, profit is maximised at the ouput level where mc=mr.
When a firm makes a profit by producing enough goods to meet demand without having leftover supply the point of profit is where marginal revenue equals marginal cost.
Profit=Total revenue - Total cost