## Marginal revenue, marginal cost & profit maximization, Microeconomics

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Marginal Revenue, Marginal Cost & Profit Maximization

* Determining profit maximizing level of output

- Profit (π ) = Total Revenue - Total Cost

- Total Revenue (R) = Pq

- Total Cost (C) = Cq

- Therefore:   Marginal Revenue, Marginal Cost & Profit Maximization

* Marginal revenue is additional revenue from producing one more unit of output.

* Marginal cost is additional cost from generating one more unit of output. * Comparing R(q) and C(q)

- Output levels: 0- q0:

• C(q)> R(q)

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