# How do you find profit-maximizing price and quantity?

## How do you find profit-maximizing price and quantity?

Thus, a profit-maximizing monopoly should follow the rule of producing up to the quantity where marginal revenue is equal to marginal cost—that is, MR = MC.

## Where is the profit-maximizing point on a graph?

Graphically, profit is the vertical distance between the total revenue curve and the total cost curve. This is shown as the smaller, downward-curving line at the bottom of the graph. The maximum profit will occur at the quantity where the difference between total revenue and total cost is largest.

How do you find profit-maximizing?

The monopolist’s profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output.

### What is a profit-maximizing price?

In economics, profit maximization is the short run or long run process by which a firm may determine the price, input and output levels that lead to the highest profit. Neoclassical economics, currently the mainstream approach to microeconomics, usually models the firm as maximizing profit.

### What is the profit-maximizing price and quantity quizlet?

The profit-maximizing quantity is the one at which the marginal revenue of the last unit was exactly equal to the marginal cost. Another way of putting this is that it’s quantity at which the marginal cost curve intersects the marginal revenue curve. Producing any more or less would decrease profits.

Why is profit maximized at MC MR?

The marginal revenue is the additional revenue added by increasing the quantity. This is also known as the additional revenue “at the margin.” Therefore, profit is maximized when marginal cost equals marginal revenue which is the same as saying when marginal profit equals zero.

#### What is profit maximization with example?

Examples of profit maximizations like this include: Find cheaper raw materials than those currently used. Find a supplier that offers better rates for inventory purchases. Find product sources with lower shipping fees. Reduce labor costs.

#### How do you find profit-maximizing quantity of labor?

A profit-maximizing firm chooses the quantity of labor so that the value of the marginal product (P H MPL) is equal to the wage (W): P * MPL = W. Divide both sides by MPL to get: P = W / MPL.

How do you find profit maximizing quantity of labor?

## What is the profit-maximizing output quizlet?

Profit-maximizing level of output is where MR=MC. Marginal profit is the difference between marginal revenue and marginal cost. Looking at the table at Q=4, marginal cost is \$175.

## What is the profit-maximizing point for a monopoly?

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.

What is the profit maximizing rule for a firm?

The Right Formula In economics, the profit maximization rule is represented as MC = MR, where MC stands for marginal costs, and MR stands for marginal revenue. Companies are best able to maximize their profits when marginal costs — the change in costs caused by making a new item — are equal to marginal revenues.