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2 cards from this section. Quick, good the night before a test.
What does profit maximisation mean?
Think about what profit means for a firm.
Define total revenue.
Consider how it relates to price and quantity sold.
What must happen for a firm to maximise profit?
Consider what happens at the point of profit maximisation.
True or False: The total revenue curve is upward sloping for a firm in perfect competition.
Think about how total revenue is calculated.
A firm has a constant market price of Rs 50. If the firm's average variable cost at a production level of 30 units is Rs 45, what is the profit or loss incurred? Additionally, what should the firm do in the short run?
Calculate TR and compare it with TVC.
Draw a graph for a firm where total costs are higher than total revenue at an output of 20 units. What does the firm need to do?
Identify the profit area in relation to total revenue and total cost.
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