Microeconomics: Profit maximization
A Matter of Costs (9/11/2007)
The rate at which variable cost changes in the short run is related to the nature of the fixed cost.
The rate at which variable cost changes in the short run is related to the nature of the fixed cost.
Border Patrol (2/27/2007)
To enhance profit, businesses often sell non-interoperable versions of the same products in different markets.
To enhance profit, businesses often sell non-interoperable versions of the same products in different markets.
Bundling - youtube (9/27/2011)
Selling goods in a bundle could increase sellers' profit under certain demand and cost conditions.
Selling goods in a bundle could increase sellers' profit under certain demand and cost conditions.
Consumer surplus under single pricing vs price discrimination (6/23/2006)
Positive consumer surplus under single pricing vs zero consumer surplus under perfect price discrimination.
Positive consumer surplus under single pricing vs zero consumer surplus under perfect price discrimination.
Cost curves under increasing and diminishing returns (8/3/2007)
Under increasing returns, high fixed cost and low variable cost lead to persistently declining average total cost. The market can accommodate only one firm. Under decreasing returns, low fixed cost and rapidly rising variable cost lead to U-shaped average total cost. The market can accommodate many firms.
Under increasing returns, high fixed cost and low variable cost lead to persistently declining average total cost. The market can accommodate only one firm. Under decreasing returns, low fixed cost and rapidly rising variable cost lead to U-shaped average total cost. The market can accommodate many firms.
Demand Elasticity and Total Revenue -youtube (transcript) (1/29/2012)
A linear downward-sloping demand curve has a range of demand elasticities and an inverted U-shaped total revenue curve under single pricing.
A linear downward-sloping demand curve has a range of demand elasticities and an inverted U-shaped total revenue curve under single pricing.
Firm vs industry output under free entry (6/23/2006)
Excessive entry under perfect competition reduces firm profit and firm output.
Excessive entry under perfect competition reduces firm profit and firm output.
Fund Raising at the Margin (9/22/2006)
The MR = MC profit maximization rule could be applied to fund raising.
The MR = MC profit maximization rule could be applied to fund raising.
Generating TR and MR for single-pricing searcher (9/19/2006)
Total revenue and marginal revenue can be derived from linear demand curve under single pricing for the price searcher.
Total revenue and marginal revenue can be derived from linear demand curve under single pricing for the price searcher.
Law of Diminishing Returns - flash (9/23/2006)
The law of diminishing returns can be represented by a S-shaped production curve in the short run.
The law of diminishing returns can be represented by a S-shaped production curve in the short run.
Marginal Revenue of Perfect Price Discriminators (11/17/2007)
The marginal revenue of perfect price discriminators is equal to price.
The marginal revenue of perfect price discriminators is equal to price.
Marginal revenue under single pricing vs price discrimination (6/23/2006)
Generate and compare marginal revenue under single pricing vs perfect price discrimination.
Generate and compare marginal revenue under single pricing vs perfect price discrimination.
Marginal Revenue under Single-pricing - Price Searchers vs Price Takers (11/17/2007)
Single pricing leads to P = MR under price taking or P > MR under price searching.
Single pricing leads to P = MR under price taking or P > MR under price searching.
Maximization and Optimization at the Margin (7/7/2006)
Optimizing at the margin can bring about static economic efficiency.
Optimizing at the margin can bring about static economic efficiency.
Measure Profit with P and ATC – No Profit for Single-pricing Searcher (9/23/2006)
Measure profit with P and ATC – No profit for single-pricing searcher.
Measure profit with P and ATC – No profit for single-pricing searcher.
Measure Profit with P and ATC – Positive Profit for Single-pricing Searcher (9/23/2006)
Measure profit with P and ATC - positive profit for price searcher.
Measure profit with P and ATC - positive profit for price searcher.
Meaure profit with P and ATC - positive profit for price taker (9/23/2006)
Profit for price taker can be measured by comparing price and average total cost.
Profit for price taker can be measured by comparing price and average total cost.
Price Searchers, Price Discriminators, and Price Takers (9/19/2006)
The uniqueness of products affects the pricing power of sellers.
The uniqueness of products affects the pricing power of sellers.
Profit and Output when P = MC for Single-pricing Searcher (6/23/2006)
When P = MC under single pricing, profit and output will be lower than when MR = MC.
When P = MC under single pricing, profit and output will be lower than when MR = MC.
Profit Maximization - Total vs Marginal (11/17/2007)
Profit maximization can be characterized with reference to the total revenue and total cost curves or the marginal revenue and marginal cost curves
Profit maximization can be characterized with reference to the total revenue and total cost curves or the marginal revenue and marginal cost curves
Profit maximization for single-pricing searcher (6/23/2006)
Compare profit-maximizing conditions using total revenue and total cost curves with those using marginal revenue and marginal cost curves for single-pricing searchers.
Compare profit-maximizing conditions using total revenue and total cost curves with those using marginal revenue and marginal cost curves for single-pricing searchers.
Profit maximization for single-pricing searcher (notes) (3/27/2007)
Notes on profit maximization for single-pricing searcher
Notes on profit maximization for single-pricing searcher
Profit maximization for the price taker (6/23/2006)
Generate marginal revenue curve (MR) from total revenue curve (TR) and marginal cost curve (MC) from total variable cost (TVC) and locate maximum profit output with MR and MC using Flash animation.
Generate marginal revenue curve (MR) from total revenue curve (TR) and marginal cost curve (MC) from total variable cost (TVC) and locate maximum profit output with MR and MC using Flash animation.
Profit maximization for the price taker (notes) (3/27/2007)
Notes on profit maximization for price takers.
Notes on profit maximization for price takers.
Profit Maximization of Price Takers - youtube (11/2/2011)
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
Profit Maximization of Price Takers - youtube (transcript) (2/6/2012)
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
As one of many small firms, price takers are powerless to set price. They set the max-profit output by equating price with marginal cost.
Profit maximization under high fixed cost – single pricing vs price discrimination (6/23/2006)
High fixed cost might not be profitable for single pricing and yet be profitable under price discrimination.
High fixed cost might not be profitable for single pricing and yet be profitable under price discrimination.
Profit maximization under natural monopoly - single pricing vs price discrimination (6/30/2006)
The price-discriminating natural monopoly can achieve higher output and higher profit because its TR (=TWP) reflects full marginal price for every unit... while the TR of the single-pricing firm reflects the same average price for every unit.
The price-discriminating natural monopoly can achieve higher output and higher profit because its TR (=TWP) reflects full marginal price for every unit... while the TR of the single-pricing firm reflects the same average price for every unit.
Profit Maximization Under Natural Monopoly - youtube (1/23/2012)
Natural monopoly with decreasing average total cost can still make profit by equating marginal revenue with marginal cost while achieving economic efficiency through price discrimination.
Natural monopoly with decreasing average total cost can still make profit by equating marginal revenue with marginal cost while achieving economic efficiency through price discrimination.
Profit Maximization Under Natural Monopoly - youtube (transcript) (1/29/2012)
Natural monopoly with decreasing average total cost can still make profit by equating marginal revenue with marginal cost while achieving economic efficiency through price discrimination.
Natural monopoly with decreasing average total cost can still make profit by equating marginal revenue with marginal cost while achieving economic efficiency through price discrimination.
Profit maximization under single pricing - youtube (11/2/2011)
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Profit Maximization under Single Pricing - youtube (transcript) (1/29/2012)
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Profit Maximization Under Single Pricing (transcript) (1/20/2012)
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Single-price searchers maximize profit by setting a uniform price where marginal revenue is equal to marginal cost.
Profit maximization under single pricing vs price discrimination (6/23/2006)
Output is higher and profit is higher under perfect price discrimination vs single pricing.
Output is higher and profit is higher under perfect price discrimination vs single pricing.
Profit vs Efficiency Maximization - youtube (11/2/2011)
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Profit vs Efficiency Maximization - youtube (transcript) (1/29/2012)
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Pricing modes determine the conflicts between profit maximization and efficiency maximization.
Regulation vs price discrimination under natural monopoly (6/30/2006)
Even if ATC is entirely above the demand curve where not even a single-pricing monopoly would want to produce, price discrimination could still ensure profit for the natural monopoly without any government regulation.
Even if ATC is entirely above the demand curve where not even a single-pricing monopoly would want to produce, price discrimination could still ensure profit for the natural monopoly without any government regulation.
Regulation vs price discrimination under natural monopoly (notes) (3/27/2007)
Notes on regulation vs price discrimination under natural monopoly.
Notes on regulation vs price discrimination under natural monopoly.
Short-run supply curve for price taker (9/23/2006)
Short-run supply curve for the price taker is its marginal cost curve above the shut-down point.
Short-run supply curve for the price taker is its marginal cost curve above the shut-down point.
Surplus under Single-pricing vs Price Discrimination (9/23/2006)
Comparing economic surplus under single pricing vs price discrimination.
Comparing economic surplus under single pricing vs price discrimination.
Surplus under Single-pricing vs Price Discrimination (notes) (3/27/2007)
Notes on surplus under single pricing vs price discrimination.
Notes on surplus under single pricing vs price discrimination.
Total revenue and total cost of the price taker (9/19/2006)
Total revenue and total cost of the price taker when the firm's demand curve is horizontal.
Total revenue and total cost of the price taker when the firm's demand curve is horizontal.