What is the profit-maximizing level of output?
A manager maximizes profit when the value of the last unit of product (marginal revenue) equals the cost of producing the last unit of production (marginal cost). Maximum profit is the level of output where MC equals MR.
Is profit maximized when price equals marginal cost?
A firm maximizes profit by operating where marginal revenue equals marginal cost. In the short run, a change in fixed costs has no effect on the profit maximizing output or price.
How do you calculate profit-maximizing cost output?
Determine marginal cost by taking the derivative of total cost with respect to quantity. Set marginal revenue equal to marginal cost and solve for q. Substituting 2,000 for q in the demand equation enables you to determine price. Thus, the profit-maximizing quantity is 2,000 units and the price is $40 per unit.
What point is the profit-maximizing level of output quizlet?
The profit maximizing level of output point is where the marginal revenue equals total cost. The revenue is greater than its variable costs ($900 > $800) so it should continue to produce! The profit maximizing level of output point is where the marginal revenue equals total cost.
What is the profit-maximizing quantity?
The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.
How do you find the profit-maximizing level of input?
Profit Maximizing – input
- Value of total product = total physical product x price of the output VTP = TPP * Py.
- Value of average product = average physical product x price of the output VAP = APP * Py = VTP/X.
What is the monopolist’s profit at the profit-maximizing level of output?
The monopolist’s profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output.
When output increases and total profit increases marginal profit must be?
At the profit-maximizing level of output: marginal profit equals zero. If profit is to rise as output expands, then marginal profit must be: positive.
What is the profit-maximizing condition quizlet?
Terms in this set (8) First-Order Conditions: Profit are maximized where marginal revenue is equal to marginal cost. The first term shows that as we increase production, we will gain in revenue the price of that good.
What is the profit-maximizing quantity quizlet?
The profit-maximizing quantity is the one at which the marginal revenue of the last unit was exactly equal to the marginal cost. Another way of putting this is that it’s quantity at which the marginal cost curve intersects the marginal revenue curve. Producing any more or less would decrease profits.
How do you determine profit-maximizing quantity?