PPT-Lesson 5-3: Cost, Revenue, & Profit Maximization

The costs that an organization incurs even when there is little or no activity are fixed costs or overhead Finding Marginal Cost Variable costs are usually associated with labor and raw materials and change with the businesss rate of operation or output. Unit 2- Revision . Please watch this video. Write down all the costs you can think of when running a barber shop.. http://barberconnect.co.uk. (video on homepage). What is a cost?. http://. www.salonsdirect.com. Marginals. for linear functions. Break Even points. Supply and Demand Equilibrium. Applications with Linear Functions. Cost, Revenue, Profit, . Marginals. Cost: C(x) = variable costs + fixed costs. Revenue: R(x) = (price)(# sold). Demand for the product of a perfectly competitive firm. P. rice determined . by . S & D. P. rice . taker . Won’t charge higher or lower than market price. H. orizontal (perfectly . elastic) at . maximization. Economic profit = total revenue - all economic costs. Economic costs include accounting cost. (. explicit. . costs. ). and opportunity costs (implicit. . costs. ).. Profit maximization. Profit Maximizing Assumptions. Firm: Technical unit that produces goods or services.. Entrepreneur (owner and manager) . Gains the firm’s profits and suffers losses and has the goal of maximizing profit.. How do businesses decide what price to charge and how much to produce?. It depends on the . character of its industry. .. Classroom Concerns. Attendance Issues* 15 Limit. Tardiness. Uniform. Assignment Completion. . 12. Competition. Competition. What is perfect competition?. How are price and output determined in a competitive industry?. Why do firms enter and leave an industry?. How do changes in demand and technology affect an industry?. Profit-Maximization. Economic Profit. A firm uses inputs j = 1…,m to make products i = 1,…n.. Output levels are y. 1. ,…,y. n. .. Input levels are x. 1. ,…,x. m. .. Product prices are p. 1. ,…,p. Marginals. for linear functions. Break Even points. Supply and Demand Equilibrium. Applications with Linear Functions. Cost, Revenue, Profit, . Marginals. Cost: C(x) = variable costs + fixed costs. Revenue: R(x) = (price)(# sold). Marginal Revenue (MR): . Change. in the firm’s total revenue resulting from a . one unit change. in production.. Marginal Cost (MC): . Change. in the firm’s total cost resulting . from . a . one unit change . IB Business & Management. IB2 Higher Level. Objectives. By the end of the lesson, students should be able to: -. To classify costs as fixed, variable, semi-variable, direct, indirect . To understand the importance of profit quality . Mr. Henry. AP Economics. AP Review . Questions from Yesterday. A requirement of perfect competition is that. Many firms sell an identical product to many buyers. There are no restrictions on entry into (or exit from) the market, and established firms have no advantage over new firms. Economics. 2 Emmanuel . Saez. Fall 2024. I.Firms. and the Decisions They Make. Three Decisions a Firm Has to Make. Acknowledgments. This PowerPoint presentation is based on and includes content derived from the following OER resource:. Principles of Microeconomics. An OpenStax book used for this course may be downloaded for free at:.