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Q. Explain Maximising revenue method?
In a number of cases, a firm's demand and cost conditions are such that marginal profits are greater than zero for all levels of production. In this case, Mπ = 0 rule has to be modified and the firm must maximise revenue. Or we can say the profit maximising quantity and price can be concluded by setting marginal revenue equal to zero. Marginal revenue equals zero when marginal revenue curve has reached its maximum value. An illustration would be a scheduled airline flight. Marginal costs of flying the route are negligible. Airline would maximise profits by filling all the seats. Airline would determine the p-max conditions by maximising revenues.
Consider a manufactured good whose production process generates pollution. The annual demand for the good is given by Qd=100-3P. The annual market supply is given by Qs=P. In both
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explain the law of demand
Suppose that Betsy's utility function is given by the equation U=Y0.3 where Y is calculated in thousands of dollars. Betsy's present job pays her $20,000 (Y=20) per year and she ca
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Q. Loss at the point of equilibrium? Losses: At the point of equilibrium i.e. E where MR = MC, firm produces OM amount of the output. To produce this output, firm incurs an a
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