#Profit Maximizing Level How To Plot The

Profit Maximizing Level How To Plot The

View Answer.Maximization of long-run profits Relationship between the short run and the long run. The change in total cost from producing the eightieth unit of output is seventh unit of output is and the change in total revenue fromNeed to understand how to plot the Total Product of Labor Curve, Average Product of Labor Curve, and the Marginal Product of Labor Curve.If the firm can sell its output for 2 per unit, what is the profit-maximizing level of output a. This is aimed toward those who have taken or are currently taking Intermediate Microeconomics.At the profit-maximizing level of output in this diagram, the firms average cost is Price 20 18 - 16 14 MR 12 AC 10 8 6 4 2 0 20 40 60 80 100 120 140 160 180 200 Quantity Refer to the figure. The shaded area to the left of the profit maximization point represents. 711 (Microeconomics)Answer all 40 questions (Use the answer sheet)1) The MR MC rule applies:A) only when the firm is a price taker.B) to firms in all types of industries.C) only to monopolies.D) only to purely competitive The level of output that this point represents is the profit maximizing quantity. ECON 1102 The profit maximizing level of output for the firm is equal Test 3: ECON 1102 Sec.

For a perfectly competitive market to maximize profits MR must equal Marginal cost and in the long run this profit will be equal to zero.*Begin with previous knowledge of the Production Theory.The Total Product of a variable factor of production identifies which outputs are possible using various levels of the variable input.The Total Product Curve is shown in the first graph.The first graph is the Total Product of Labor Curve (TPL)There are three characteristic points that have been pointed out:The average product is the TPL/Q and the MPL is the slope of the TPL curve.At point B the slope reaches its maximum and this is where the Average will reach its maximum as well. It means that at some price you will have a horizontal AR and MR curve and this coincides with the demand curve. From this we see MR = PNext we combine all of the information we just found.***This equation only holds for perfect competitionThis last equation is incredibly important to understand. From this the О”QвЂ™s cancel leaving only P. This will give us our Average Revenue (AR)We substitute P*Q into the equation and we come to see that AR = P because the Q cancels in the numerator and denominator.Next we want to look at the change in Revenue, which is the slope and also known as the Marginal Revenue (MR.) We must divide the change in Total Revenue by the change in Quantity.We substitute P*Q again into the equation and can pull out the P because it is constant.

This is shown in the graph.As the marginal product of labor increases the MC decreases and when the marginal product of labor decreases the MC increases. We divide the change in Total Cost by the change in QuantityMC= О”TC/О”Q= О”TVC/О”Q= О”(w*L)/О”Q= wО”L/О”Q= w/(О”Q/О”L)= w/MPLThe change in Total Cost is equal to the change in total variable cost because the fixed cost is not changing.As the MPL increases the MC decreased and as the MPL decreases the MC increases. This is also previously known.As average product of labor (APL) increases the AVC decreases and as the APL decreases the AVC increases.Next we find the slope of the cost curve. We can now manipulate the equation and we know that Q/L = APL from above.

The AC curve will be above the AVC curve and the MC will intersect at the minimum of the AVC and AC curve.