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Marginal Revenue Curve

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Marginal Revenue Curve? The marginal revenue curve shows the additional revenue gained from selling one more unit. As mentioned before, a firm in perfect competition faces a perfectly elastic demand curve for its product—that is, the firm’s demand curve is...

Production Function – Estimate of Inputs

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How Does the Production Function Estimate Inputs? We’ve explained that a firm’s total costs depend on the quantities of inputs the firm uses to produce its output and the cost of those inputs to the firm. The firm’s production function tells us how much output the...

Profit Maximization – Marginal Revenue and Costs

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

Using Marginal Revenue and Marginal Costs to Maximize Profit The approach that we described in the previous section, using total revenue and total cost, is not the only approach to determining the profit maximizing level of output. In this section, we provide an...

Profit Maximization in Perfectly Competitive Market

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Highest Profit Point in a Perfectly Competitive Market? A perfectly competitive firm can sell as large a quantity as it wishes, as long as it accepts the prevailing market price. The total revenue depends on the quantity sold and the price charged. If the...

Shutdown Point – Cost Curve

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Shutdown Point on The Cost Curve? Shutting down can reduce variable costs to zero, but in the short run, the firm has already paid for fixed costs. As a result, if the firm produces a quantity of zero, it would still make losses because it would still need...
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