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#cfa-level-1 #economics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit
Aproach:
  • marginal revenue (MR) equals marginal cost (MC);

When using the marginal revenue–marginal cost approach, the firm compares the change in predicted total revenue (MR) with the change in predicted total costs (MC) by unit of output. If MR exceeds MC, total profit is increased by producing more units because each successive unit adds more to total revenue than it does to total costs. If MC is greater than MR, total profit is decreased when additional units are produced. The point of profit maximization occurs where MR equals MC.
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3.1.4. Output Optimization and Maximization of Profit
nit sales, which becomes the basis for estimates of future revenue and production costs. By comparing predicted total revenue to predicted total costs for different output levels, the firm targets the quantity that yields the greatest profit. <span>When using the marginal revenue–marginal cost approach, the firm compares the change in predicted total revenue (MR) with the change in predicted total costs (MC) by unit of output. If MR exceeds MC, total profit is increased by producing more units because each successive unit adds more to total revenue than it does to total costs. If MC is greater than MR, total profit is decreased when additional units are produced. The point of profit maximization occurs where MR equals MC. The third method compares the estimated cost of each unit of input to that input’s contribution with projected total revenue. If the increase in projected total revenue coming from the


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