Questions and Answers
What does Total Revenue equal?
Price x quantity sold
What does Profit equal?
Total Revenue - Total cost
Define Marginal Revenue.
Change in total revenue/change in quantity
What is the Optimal output rule?
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If TR > TC, then the firm is profitable.
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If TR = TC, then the firm breaks even.
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What does TR stand for?
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Study Notes
Total Revenue
- Total Revenue is calculated by multiplying price by quantity sold.
Profit
- Profit is determined by subtracting total cost from total revenue.
Marginal Revenue
- Marginal Revenue reflects the change in total revenue when quantity sold changes; calculated as the change in total revenue divided by the change in quantity.
Optimal Output Rule
- The optimal output rule states that profit is maximized when the quantity produced is such that the marginal revenue from the last unit equals its marginal cost.
Profitability Indicators
- When Total Revenue (TR) exceeds Total Cost (TC), the firm is profitable.
- When Total Revenue equals Total Cost, the firm breaks even.
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Description
Test your understanding of key concepts in Microeconomics with these flashcards from Module 25. Each card covers essential terms such as Total Revenue, Profit, and Marginal Revenue. Perfect for reinforcing your knowledge and preparing for exams.
