2. The second is the marginal revenue (MR) to marginal cost (MC) approach. MR=MC. Therefore your marginal revenue (MR) is equal to your marginal cost (MC) which will give you your total profit.
B. MR=change to TR/change to Q
Marginal revenue is extra revenue that is received each time your business sells 1 additional unit.
1. Each time your quantity goes up your marginal revenue will decrease.
C. MC=change in TC/change in Q.
Marginal cost (MC) is the cost for your business to produce 1 more unit.
1. In the given scenario the marginal cost increases every time the units produced increases.
D. The profit maximization for Company A occurs at 8 units produced. TR-TC = $540.00 at 8 units.
E. If Company A’s marginal revenue is more than their marginal cost (MR>MC), then Company A should make more units until marginal revenue is equal to marginal cost (MR+MC).
F. If Company A’s marginal cost (MC) ends up being greater than their marginal revenue (MR) then that would cause a loss in revenue therefore they would need to cut back on their units produced until marginal cost is equal to marginal revenue (MC=MR).