Chapter
21
Profit
Maximization
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
21­1
Chapter
Objectives
Marginal
Revenue
Profit
maximization
and
loss
minimization
The
short­run
supply
curve
The
long­run
supply
curve
The
shut­down
and
break­even
points
Economic
efficiency
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
21­2
Graphing
Demand
&
Marginal
Revenue
Total
Revenue
is
price
X output
Marginal
revenue is the increase
in total
revenue
when
output
sold goes up
by
one
unit
Output
Price
Total
Revenue
Marginal
Revenue
1
$5
$
5
$5
2
5
10
5
3
5
15
5
4
5
20
5
5
5
25
5
6
5
30
5
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
21­3