Chapter 8.3: Marginal Revenue, Marginal Cost, and Profit Maximization
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13 Terms
Profit
the difference between (total) revenue and (total) cost
revenue
finding the firm’s profit-maximizing output level means analyzing its ___.
Revenue
equal to the price of the product P times the number of units sold R = Pq
the greatest
To maximize profit, the firm selects the output for which the difference between revenue and cost is ___.
Marginal Revenue
the change in revenue resulting from a one-unit increase in output. The slope of the revenue curve.
Marginal Cost
The slope of this curve, which measures the additional cost of producing one additional unit of output
positive; zero
The total cost is ___ when output is ___ because there is a fixed cost in the short run.
negative
Profit is ___ at low levels of output because revenue is insufficient to cover fixed and variable costs.
q*
the profit-maximizing output level
MR(q) = MC (q)
Profit is maximized when
no effect
How much output the firm decides to sell will have ___ on the market price of the product.
Industry supply and demand curves
determines the market price
MR = MC = P
Along the demand curve of an individual firm in a competitive market
Note 
Flashcards (33)