Textbook Notes (368,781)
Canada (162,164)
Economics (818)
ECON 2310 (47)
Chapter

Intermediate Economics Chapter Nine Notes

3 Pages
119 Views
Unlock Document

Department
Economics
Course
ECON 2310
Professor
Johanna Goertz
Semester
Winter

Description
Chapter Nine Excluding 96Profit Maximization y Profit Maximizing Quantities and Prices o A firms profitis equal to its revenue R less its cost C that is RCo The firms profit maximization problem is to find the quantity or price that results in the largest possible profito In very competitive industries a firm that does not maximize profit will simply fail to surviveo Choosing Price versus Choosing QuantityA products demand function states how many units buyers will demand at each price It takes the form Quantity demanded DPrice Holding fixed all of the factors other than price that might affect demand for the product consumer tastes consumer income and the prices of substitutes Reading the demand curve in reverse tells a manager the price she needs to charge PQ to sell quantity Q This relationship is known as the products inverse demand function a function of the form Price PQuantity Demandedo Maximizing ProfitIf the firm wants to sell Q units it must charge price PQ Its revenue R when it sells Q units is therefore R PQ x QTo earn the greatest possible profit the firm should choose the sales quantity that maximizes revenue less cost where both revenue and cost depend on how much the firm decides to sellRQCQ PQ x QCQThe be
More Less

Related notes for ECON 2310

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit