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