Negative profit, Microeconomics

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

Posted Date: 10/12/2012 5:17:39 AM | Location : United States







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