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2 cards from this section. Quick, good the night before a test.
Define profit in terms of total revenue and total cost.
What do we subtract from revenue to find profit?
What does MC stand for in profit maximization?
Think about what cost refers to an additional unit.
What does profit maximization involve?
Consider what is being increased to achieve profit.
True or False: In the long run, a firm can sustain operations if the price is less than average cost.
Think about business sustainability over time.
If a firm has a total cost of Rs 100,000 producing 500 items and has a marginal cost of Rs 200 for the next item but is currently selling each item for Rs 250, should it increase production?
Think about whether the selling price covers the marginal cost.
Consider a firm with fixed costs of Rs 30,000 and variable costs dependent on output. Discuss the impact of an increased price in a competitive market and how it will influence the firm’s decision-making.
Consider how price changes affect cost recovery.
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