Exam 8: Output Price and Profit the Importance of Marginal Analysis

Total profit is represented by the vertical distance between a total revenue curve and a total cost curve.

Table 8-1 -To maximize its profits, the firm described in Table 8-1 should produce ____ unit(s) of output.

Decision making that seeks only solutions that are acceptable is called

A computer manufacturer sells 1,000 units per month at $500 each.A price cut to $400 is being considered.His marginal cost is constant at $300 per unit.To maintain profits, quantity sold must increase to at least

Profit is maximized at the output at which marginal revenue exceeds marginal cost by the greatest margin.

When marginal cost exceeds marginal revenue,

If marginal cost is less than average cost, average cost must fall when more units are produced.

Price and output decisions are two aspects of the same choice.

If the average cost of a product is $10 per unit and the price is $5, the firm is losing money.

Economists and accountants use the same definition of profit.

A firm is generally more interested in marginal profits than in total profits.

Total revenue is equal to quantity multiplied by average revenue.

Is it a good thing to go to a point where marginal profit is zero? Explain.

Herbert Simon has concluded that decision making in industry is often best described as

A company draws its total cost curve and total revenue curve on the same graph.If the firm wishes to maximize profits, it will select the output at which the

Economists assume that business firms attempt to maximize their profits.

To find a firm's total revenue at every quantity, all you need to know is

A profit-maximizing firm always

Figure 8-5 -In Figure 8-5, profits are maximized at output of

Average cost is the cost of producing the next unit.