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#cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit

Profit maximization occurs when

  • the revenue value of the output from the last unit of input employed equals the cost of employing that input unit

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3.1.4. Output Optimization and Maximization of Profit
Profit maximization occurs when the difference between total revenue (TR) and total costs (TC) is the greatest; marginal revenue (MR) equals marginal cost (MC); and the revenue value of the output from the last unit of input employed equals the cost of employing that input unit (as later developed in Equation 12). All three approaches derive the same profit-maximizing output level. In the first approach, a firm starts by forecasting unit s


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