Th3.3: Condition for Profit Maximisation Flashcards
1
Q
When is profit maximised?
A
when TR and TC are furthest apart, with TR above TC
2
Q
Why will profit always be maximised when MC = MR?
A
if producing more adds to revenues than it does to cost, producing that must have increased profit and vice versa
3
Q
Sometimes MR and MC may cross as two points and thus…
A
the profit maximising point is where marginal cost rises as it crosses the MR line
