Principles of Microeconomics / Unit 7 MIC 0605 short lesson, about 20 seconds
Total Revenue Against Total Cost
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The idea
Profit is total revenue minus total cost. One way to find the best quantity is to compute both at every output and pick the largest gap.
In practice
Total revenue is a straight line from the origin; total cost starts at the fixed cost and bends up.
Where people slip
The largest gap is the best the firm can do, and it may still be a loss.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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