1) A firm produces at the quantity where marginal revenue equals marginal cost to maximize profits. This is the point where additional revenue from producing another unit equals the additional costs.
2) A firm's profit is maximized by producing at the output level where marginal revenue equals marginal cost. Producing more would mean marginal costs exceed marginal revenues, reducing profits.
3) In the short run, a competitive firm will produce the quantity where marginal revenue equals marginal cost to maximize profits. The firm's profit is represented by the rectangle between average total cost and marginal cost at the profit-maximizing quantity.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Mohammad Abadullah
Dilruba Jahan Popi
Rabiul Islam
Effat Ara Saima
MD. Rajib Mojumder (Captain)
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Equilibrium of firm and Industry under Perfect CompetitionBikash Kumar
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Md. Sultan Mahmud
Md. Shaon Mollah
Md. Mamun Miah
Md. Abid Hasan
Shimul Kumar Mondal
Application of indifference curve analysisYashika Parekh
The law of demand expresses the functional relationship between price and quantity demanded.
Assumption of ‘ Ceteris Paribus’. A hypothetical assumption
If price of a commodity falls, the quantity demanded of it will rise and vice versa.
Inverse relationship between price and quantity
Other factors also play an important role.
Real world variables.
The indifference curve analysis has also been used to explain producer’s equilibrium, the problems of exchange, rationing, taxation, supply of labour, welfare economics and a host of other problems. Some of the important problems are explained below with the help of this technique.
(1) The Problem of Exchange:
With the help of indifference curve technique the problem of exchange between two individuals can be discussed. We take two consumers A and В who possess two goods X and Y in fixed quantities respectively. The problem is how can they exchange the goods possessed by each other. This can be solved by constructing an Edgeworth-Bowley box diagram on the basis of their preference maps and the given supplies of goods.
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Mohammad Abadullah
Dilruba Jahan Popi
Rabiul Islam
Effat Ara Saima
MD. Rajib Mojumder (Captain)
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Equilibrium of firm and Industry under Perfect CompetitionBikash Kumar
Macro Economics
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
Md. Sultan Mahmud
Md. Shaon Mollah
Md. Mamun Miah
Md. Abid Hasan
Shimul Kumar Mondal
Application of indifference curve analysisYashika Parekh
The law of demand expresses the functional relationship between price and quantity demanded.
Assumption of ‘ Ceteris Paribus’. A hypothetical assumption
If price of a commodity falls, the quantity demanded of it will rise and vice versa.
Inverse relationship between price and quantity
Other factors also play an important role.
Real world variables.
The indifference curve analysis has also been used to explain producer’s equilibrium, the problems of exchange, rationing, taxation, supply of labour, welfare economics and a host of other problems. Some of the important problems are explained below with the help of this technique.
(1) The Problem of Exchange:
With the help of indifference curve technique the problem of exchange between two individuals can be discussed. We take two consumers A and В who possess two goods X and Y in fixed quantities respectively. The problem is how can they exchange the goods possessed by each other. This can be solved by constructing an Edgeworth-Bowley box diagram on the basis of their preference maps and the given supplies of goods.
perfect competition, monopoly, monopolistic and oligopolysandypkapoor
Price determination under different market structure and characterstics of all these market stractures along with graphical presentation of Perfect competition, Monopoly, Monopolistic and Oligopoly market structue
A simple and comprehensive presentation on Profit maximization v/s Wealth Maximization.
By Arvinder Pal Kaur
Faculty of Management
Northwest Group of Institutions
Dhudhike, MOGA
MBA 681 Economics for Strategic DecisionsPrepared by Yun Wan.docxalfredacavx97
MBA 681 Economics for Strategic Decisions
Prepared by Yun Wang
1. How does firm maximize profit.
2. Poduction decision in the perfect competitive market.
3. Production decision in monopolistic competitive market.
4. Production decision in oligopoly.
5. Production decision in monoply.
6. Two special models in oligopoly market.
1. How a Firm Maximizes Profit:
All firms try to maximize profits based on the following equation:
Profit = Total Revenue − Total Cost
The rules we have just developed for profit maximization are:
1. The profit-maximizing level of output is where the difference between total revenue and total
cost is greatest, and
2. The profit-maximizing level of output is also where MR = MC.
Notice: All of these rules do not require the assumption of market type; they are true for all
firms with different market structures (perfect competition, monopolistic competition,
oligopoly, monopoly)!
The Four Market Structures:Structures
Market Structure
Characteristic Perfect Competition
Monopolistic
Competition Oligopoly Monopoly
Type of product Identical Differentiated Identical or differentiated Unique
Ease of entry High High Low Entry blocked
Examples of
industries
Growing wheat
Poultry farming
Clothing stores
Restaurants
Manufacturing computers
Manufacturing automobiles
First-class mail delivery
Providing tap water
2. Profit Determination in Perfect Competitive Market:
A firm maximizes profit at
the level of output at which
marginal revenue equals
marginal cost.
The difference between
price and average total cost
equals profit per unit of
output.
Total profit equals profit per
unit of output, times the
amount of output: the area
of the green rectangle on the
graph.
In the graph on the left, price
never exceeds average cost,
so the firm could not possibly
make a profit.
The best this firm can do is to
break even, obtaining no
profit but incurring no loss.
The MC = MR rule leads us to
this optimal level of
production.
The situation is even worse
for this firm; not only can it
not make a profit, price is
always lower than average
total cost, so it must make
a loss.
It makes the smallest loss
possible by again following
the MC = MR rule.
No other level of output
allows the firm’s loss to be
so small.
Identifying Whether a Firm Can Make a Profit
Once we have determined the quantity where MC = MR, we can immediately know
whether the firm is making a profit, breaking even, or making a loss. At that quantity,
• If P > ATC, the firm is making a profit
• If P = ATC, the firm is breaking even
• If P < ATC, the firm is making a loss
Even better: these statements hold true at every level of output.
However, if the price is too low, i.e. below the minimum point of
AVC, the firm will produce nothing at all.
The quantity supplied is zero below this point.
3. Profit Determination in Monopolistic Competitive Market:
(1 of 3)
In the short run, a monopol.
The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.Four basic types of market structure are (1) Perfect competition: many buyers and sellers, none being able to influence prices. (2) Oligopoly: several large sellers who have some control over the prices. (3) Monopoly: single seller with considerable control over supply and prices. (4) Monopsony: single buyer with considerable control over demand and prices.
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
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Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
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Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Role of Information Technology in Revenue - Prof Oyedokun.pptx
Profit maximization and perfect competition
1. SUBMITTED TO :DR Sabahat
SUBMITEED BY : Javeria gul
Zaheer abbas
Subject :Micro Economics
Department of Economics NUML
Islamabad
2. A cost curve describes the minimum
cost at which a firm can produce
various amount of output.
A perfectly competitive firm is presumed
to produce the quantity of output that
maximizes economic profit--the
difference between total revenue and
total cost revenue and marginal cost.
3. This production decision can be
analyzed directly with economic
profit, by identifying the
greatest difference between total
revenue and total cost, or by the
equality between marginal
4.
5. To obtain the profit maximizing
output quantity, we start by
recognizing that profit is equal to total
revenue (TR) minus total cost (TC).
Given a table of costs and revenues at
each quantity, we can either compute
equations or plot the data directly on a
graph. The profit-maximizing output
is the one at which this difference
reaches its maximum.
6. Profit equals total revenue minus total
cost. Given businesses want to
maximize profit, they should keep
producing more output as long as an
additional unit adds more to revenue
than it adds to cost.
7. Economists call the added revenue
marginal revenue and the added cost
marginal cost. Thus, firms should
continue producing more output
until marginal revenue equals
marginal cost. That’s the point where
profits are maximized.
Marginal revenue (MR),
the increase in total revenue for
production of one additional unit,
will always be equal to the market
price for a price taker.
8. If the market price of a good is
Rs15, and a firm produces 10
units of a good per day, then its
total revenue for the day will
be Rs15 × 10 = Rs150. The
marginal revenue associated
with producing an eleventh
unit per day would be the
market price, Rs15; total
revenue per day would
increase from Rs150 to Rs165
(11 × Rs15).
9. Marginal costs will vary, depending upon the
quantity produced. We would expect the firm
to increase input up to the point where
marginal cost is equal to the market price. In
the short run, a firm will produce as long as
its average variable costs do not exceed the
market price. If the market price is less than
the firm's total average cost, but greater than
its average variable cost, then the firm will
still operate in the short run.
π = MR = MC
10. Marginal Cost-
Marginal Revenue
Perspective
Firms will produce up
until the point that
marginal cost equals
marginal revenue.
This strategy is based
on the fact that the
total profit reaches its
maximum point
where marginal
revenue equals
marginal profit .
MR= MC curve
11. This is the case because the firm will
continue to produce until marginal profit
is equal to zero, and marginal profit
equals the marginal revenue (MR) minus
the marginal cost (MC) Another way of
thinking about the logic is of producing
up until the point of MR=MC is that if
MR>MC, the firm should make more
units: it is earning a profit on each. If
MR<MC, then the firm should produce
less: it is making a loss on each
additional product it sells.
12. In the short run a firm operates with a fixed
amount of capital and must choose the
levels of its variable inputs (labor and
materials) to maximize profit. The average
and marginal revenue curves are drawn as
a horizontal line at a price equal to Rs 40.
we have drawn the average total cost curve
AC , and the marginal cost curve MC so
that we can see the firm’s profit more
easily.
13.
14. Profit is maximized at point A, where output is
q* =8 and the price is Rs 40 because marginal
revenue is equal to marginal cost at this point.
To see that q* =8 is indeed the profit
maximizing output, note that a lower output
say q1=7 marginal revenue is greater than
marginal cost ; profit could thus be increased
by increasing output. The shaded area
between q1=7and q* shows the lost profit
associated with producing at q1. at a higher
output say q2 MC>MR thus reducing output
saves a cost exceeds the reduction in revenue.
The shaded area between q* and q2=9 shows
the lost profit associated with producing at q2.
15. In the short run the competitive
firm maximizes its profit by
choosing an output q* at which its
marginal cost is equal to the price
P or MR = MC at quantity, q*, of 8
At a quantity less than 8, MR >
MC, so more profit can be gained
by increasing output. The profit
of the firm is measured by the
rectangle ABCD. Any change in
output, whether lower at q1 or
higher at q2 , will lead to lower
profit.
16. The short-run market supply curve shows the
amount of output that the industry will
produce in the short run for every possible
price. The industry’s output is the sum of the
quantities supplied by all of its individual
firms. Therefore the market supply curve can
be obtained by adding the supply curves of
each of these firms. There are only three firms,
all of which have different short run
production costs.
17.
18. The firm’s marginal cost curve is drawn only for
the portion that lies above its average variable cost
curve. At any price below p1, the industry will
produce no output because p1 is the minimum
average variable cost of the lowest cost firm.
Between p1 and p2 only firm 3 will produce. At p2
the industry supply will be the sum of the quantity
supplied by all three firms.firm1 supplies 2 units
and firm 2 supplies 5 units, and firm 3 supplies 8
units. Industry supply is thus 15 units. At price p3
firm 1 supplies 4 firm 2 is 7 and firm 3 supplies 10
units, the industry supplies 21 units.
19. The short-run market supply curve shows the
amount of output that the industry will
produce in the short run for every possible
price.
The short-run industry supply curve is the
summation of the supply curves of the
individual firms. Because third firm has a
lower average variable cost curve then the first
two firms, the market supply curve S begins at
price P1 and follows the marginal cost curve of
the 3rd firm MC3 until price equals P2.
20. The producer
surplus for a
firm is measured
by the shaded area
below the market
price and above the
marginal cost curve,
between output 0
and q* the profit
Maximizing output.
It is equal to rectangle
ABCD.
21. The graph illustrates short run producer
surplus for a firm. The profit maximizing
output is q* where P=MC. The surplus that
the producer obtain from selling each unit is
the difference between the price and MC of
producing the unit. The producer surplus is
then the sum of these unit surpluses over all
the units that the firm produces. When we add
the marginal cost of producing each level of
output from 0 to q* , we fined that the sum is
the total variable cost of producing q*.
22. The producer
Surplus for a
Market is the area
Below the market
price and above
The market supply
Curve, 0 and
output Q.