Economics problem

574 views 3 replies

Hello, here's an economics querry...

 For profit maximization, firms should continue producing more output until marginal revenue equals marginal cost. That’s the point where profits are maximized.

My question is, when MR=MC, marginal profit ie MR-MC=0. When marginal profit is zero, how can it be profit maximization ? ? 

Replies (3)
See..upto the point marginal profit is positive..the total profit is increasing..when marginal profit becomes zero..the total profit becomes stable..and the marginal does not contribute further to increase the profit..hence at the point wher3 marginal profut is zero.. toral profit reaches its maximum...and thereafter as marginal profit becomes negative, total profit starts falling.
It is the total profit that we are maximising...not the marginal profit!

When mr > mc total profit increases. Beyond a certain level of units, mr < mc total profit decreases. The equilibrium is when mr = mc. This is the point when profits are maximised. In terms of time line it's first mr > mc, then mr = mc and finally mr < mc.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
ARTICLESHIP 11 July 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 27 June 2026
Article

SNCO

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 28 June 2026
Article Assistant

Sharma Chetan And Company

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 24 June 2026
ARTICLE ASSISTANT

BHUPINDER SHAH AND COMPANY

New Delhi

CA Inter

View Details
Company
20 June 2026
Chartered Accountant

ANV & Company

New Delhi

CA

View Details
Company
05 July 2026
Financial Controller

NovumLake Partners

Mumbai

CA

View Details
Company
19 June 2026
Accounts Executive

Getfive Advisors Pvt. Ltd.

Ahmedabad

CA Inter

View Details