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3 cards from this section. Quick, good the night before a test.
Define marginal revenue.
Think about how much additional income comes from selling more.
What is the condition for profit maximization?
What must be equal for maximum profit?
What condition must hold for profit maximization in a perfectly competitive market?
Think about what happens at different production levels.
True or False: A firm will increase production as long as MR is higher than MC.
Consider the benefit versus the cost of producing more.
A firm has a total revenue of $800 when it sells 100 units. Calculate the marginal revenue when the firm decides to sell an additional 10 units, bringing total revenue to $860.
Calculate the change in revenue over the change in quantity.
A company finds that for the last unit sold, marginal revenue is $12 and marginal cost is $15. What should the firm do next?
Evaluate costs versus revenue and determine profit implications.
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