ECONOMICS

Economics

Economics

Define Marginal Revenue

Marginal Revenue is the addition to total revenue resulting from the addition of one unit to total output. Geometrically marginal revenue is the slope of the total revenue curve at the appropriate output quantity. Its formula is MR1= TR1-TR0' and so on.

Explain Marginal Revenue Relationship with Total Revenue

Total revenue and marginal revenue are two vital revenue concepts. The marginal revenue relation with total revenue is, when the firm is perfectly competitive. The price at which the firm can sell output is constant and is determined by market supply and demand. Total revenue in this case is, a “constant price times” of the amount output sold. Marginal Revenue is the change in revenue when more than one unit is sold. For a monopoly firm, the selling amount of firm depends on the price.

Define Marginal Cost

Marginal cost is useful, just as marginal product, as it measures the incremental changes in output when, ceteris paribus, the utilization of a single input is changed; marginal cost calculates the additional cost associated with output production. Like marginal product, marginal cost is the same as the slope of its integrated total, and is based on the following equation: MC = ?TC/?Q.

Explain Marginal Cost Relationship with Total Cost

The marginal cost is the extra cost of producing a unit. For example, if the cost of making four units is £ 1000 and the cost of making five units is £ 1200, then the marginal cost of the fifth unit is £ 200. If the marginal cost is positive, it means that the total cost must have increased. For instance, a marginal cost of £300 means that the total costs have gone up by £300 when another unit is made. If the marginal cost is £400 then, the total costs will rise by this amount. If the marginal cost is £0 then, it means that the total costs do not change when an extra unit is produced. The marginal cost, accordingly shows the rate of change of the total costs. The relationship between the marginal cost and the total cost is shown in Figure.

Profit

Profit is the ratio of net profit (after taxes) to total sales and shows how much profit a retailer makes on each dollar of sales after all expenses and taxes have been met.

“The positive gain from an investment or business operation after subtracting for all expenses. opposite of loss”.

Explain the Concept of Profit Maximization

Profit ...