Determination of optimum output and price level, Managerial Economics

The optimum output and price level is always determined with the concepts of revenue and costs-the difference in joint or independent production will show in the differences in costs and revenues generated in both scenarios. The demand curve to derive total revenue curve and the first differential of this gives us MR. The TVC is used to arrive at MC, as the fixed costs have no role in marginal cost-the fixed costs affect total profits only. Every firm's objective is to maximize profits where profits are defined as (total revenues-total variable costs-total fixed costs). The marginal revenue and marginal cost approach says that, optimum level of output is that level of output at which marginal revenue equals marginal cost and marginal cost cuts marginal revenue from below and the corresponding price would be optimal price.

Posted Date: 7/13/2012 4:01:30 AM | Location : United States







Related Discussions:- Determination of optimum output and price level, Assignment Help, Ask Question on Determination of optimum output and price level, Get Answer, Expert's Help, Determination of optimum output and price level Discussions

Write discussion on Determination of optimum output and price level
Your posts are moderated
Related Questions
(a) Define and explain, using diagrams, consumers' surplus; producers' surplus and total surplus that a society can derive from production and consumption of a good at a particu

Menu Costs   Why do firms not change their prices very  frequently? Obviously, the costs of changing prices at  frequent intervals and in small amounts must be more  than the b

Why does the demand curve slope downwards? As Figure above demonstrates, demand curve slopes downward to the right. Downward slope of the demand curve reads the law of demand i

write a note on marris growth maximising model?

Let there be two consumers A and B, each buying at most two units of a good. A values having one unit at £10 and having two units at £12 whereas B values having one unit at £8 and


You have opened your own word processing service. You have already bought a special computer needed for word processing and paid $5,000 for it. However, due to the cost changes in

Determine the Managerial economics techniques Though the most frequent applications of these techniques are as below:  Risk analysis: Numerous models are used to quantif

Factor combination in the long run In the long run it is possible to vary all factors of production. The firm is therefore restricted in its activities by the law of diminish

Diminishing Marginal Utility Diminishing marginal utility as well is to be held responsible for the rise in demand for a product when its price declines. When an individual pur