Negative profit, Microeconomics

Assignment Help:

Negative profit 

  • FC + VC > R(q)
  • MR > MC

   Indicates higher profit at the higher output

- Question: Why is profit negative when the output is zero?

- Output levels: q0 -  q*

  • R(q)> C(q)
  • MR > MC

  Indicates higher profit at the higher output while Profit is increasing

- Output level: q*

  • R(q)= C(q)
  • MR = MC
  • Profit is maximized
  • Question

-Why is profit reduced while producing more or less than q*? 

- Output levels beyond q*

  • R(q)> C(q)
  • MC > MR
  • Profit is decreasing

* Thus, it can be said:

- Profits can be maximized when MC = MR.
2450_negative profit.png

  : when maximized   are   Profits


Related Discussions:- Negative profit

Marginal revenue function, Consider a market that is served by a single-pri...

Consider a market that is served by a single-price monopolist with marginal cost given by MC = $100 + Q. The market demand is given by P = $800 – 3Q. Determine the following: the f

Foreign trade, FOREIGN TRADE: Interdependence between the economies of...

FOREIGN TRADE: Interdependence between the economies of the world has increased multifold. External sector in the economy has gained primeimportance. Both exports and imports

Demand and Supply changes, The price of oil increases because OPEC reduces ...

The price of oil increases because OPEC reduces oil production

Marginal social benefit, Consider the following information relating to the...

Consider the following information relating to the pulp market.   Demand     Supply   Output(tonnes/ da

Keys of the profit maximisation in production technology, What are the keys...

What are the keys of the profit maximisation in production technology? Profit Maximization in production technology: a. Producer Behavior b. Producer’s Optimal Choice

Illustrate the concept of production possibility curve, Differentiate the d...

Differentiate the definition of economics as given by Prof. Marshall and Prof.Robbins. Illustrate the concept of production possibility curve .How PPC is helpful to solve econom

Describe classical economics, Q. Describe Classical Economics? Classica...

Q. Describe Classical Economics? Classical Economics:Tradition of economics which began with Adam Smith and continued with other theorists including Thomas Malthus, David Ricar

Location of industry and localization of industry, Location of industry and...

Location of industry and localization of industry: Location of industry tries to answer the key economic question "where to produce". It involves deciding on the area that an

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd