Total profits are maximized where TR equals TC the TR curve and the TC curve are parallel the TR curve and the TC curve are parallel and TC exceeds TR the TR curve and the TC curve are parallel and TR exceeds TC
Question
Total profits are maximized where TR equals TC the TR curve and the TC curve are parallel the TR curve and the TC curve are parallel and TC exceeds TR the TR curve and the TC curve are parallel and TR exceeds TC
Solution
Total profits are maximized where the Total Revenue (TR) curve and the Total Cost (TC) curve are parallel and TR exceeds TC.
Here's why:
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Total Revenue (TR) is the total income a firm receives from selling its product or service.
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Total Cost (TC) is the total expense the firm incurs in producing and selling its product or service.
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When TR equals TC, the firm is breaking even. It's not making a profit, but it's not losing money either.
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When the TR curve and the TC curve are parallel, it means that for every unit increase in output, TR and TC are increasing at the same rate.
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If the TR curve and the TC curve are parallel and TC exceeds TR, the firm is operating at a loss because it's costing more to produce than the firm is earning from sales.
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Therefore, for total profits to be maximized, the TR curve and the TC curve must be parallel (indicating a constant rate of profit per unit) and TR must exceed TC (indicating that revenue from sales is greater than the cost of production).
Similar Questions
In a perfectly competitive market, profit will be maximum where;Group of answer choicesWhere the TR curve intersects the TVC curve.Where the TR curve is tangent to the TC curve.The gap between the TR curve and TC curve is maximum.The TR curve intersects the TC curve.
Total Revenue (TR) curve?
A perfectly competitive firm's total revenue (TR) curve will __.Multiple choice question.slope downward and to the right because each extra unit of sales increases total revenue by a constant amounthave a constant slope because each extra unit of sales increases total revenue by a constant amounthave a variable slope due to changes in each extra unit of sales that vary with different levels of salesbe negatively sloping because each extra unit of sales increases total revenue by a constant amount
A perfectly competitive firm's total revenue (TR) curve will slope and to the .
When a profit-maximising firm in a monopolistically competitive market is producing the break-even quantity: A. it will be earning economic profits B. its demand curve will be tangent to its average total cost curve C. its demand curve can be above, below or be tangent to its average total cost curve D. its marginal revenue will exceed marginal cost
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