Marginal Revenue, Marginal Cost, and Profit Maximization

3 years ago
Microeconomics

Profit – Difference between revenue and total cost

Marginal revenue – Change in revenue resulting from a one-unit increase in output.

MR(q) = MC(q) = P (in the short run, the competitive firm maximizes its profit by choosing an output q at which MC=P)

**If a firm is producing any output, it should produce at the level at which marginal revenue equals marginal cost.

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Bijay Satyal
Bijay Satyal
Dec 1, 2021
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