All Firms Should Produce at MR=MC Essay Example for Free

All Firms Should Produce at MR=MC Essay In economics, the point of profit maximizing and loss minimizing is called MR=MC. This point is where marginal revenue equals marginal cost, meaning that cost does not exceed revenue and revenue does not exceed cost. This is a profit-maximizing zone, meaning that total cost is not the lowest, but is farthest away from the total returns. The optimal point of production for the firm is at the point MR=MC. Marginal revenue is defined as the change in total revenue as a result of producing an additional unit, while marginal cost is the increase or decrease of a firms total cost of production as a result of the change in production by one additional unit. When these two are equal, the firm is not losing money, and is making the most profit possible. In the area of the graph where less quantity is being sold, the firm still obtains a profit but it is not maximized, and in the area of the graph where more quantity is being sold, profit is less and money can be lost from the firm. To the left of MR=MC, cost is low to the firm and revenue is high. As the graph progresses toward the point of MR=MC, each unit provides less and less profit. As the first unit is produced, the profit is high for that unit, but the profit for each extra unit produced declines toward the point of profit maximization. This may sound absurd, and may make the reader wonder why the firm does not produce at the first unit. However, as each unit is produced, the firm gets to keep the profit from every unit produced previously. This would add up to far more profit than if the firm produced when cost is lowest and revenue is greatest. The point where marginal revenue equals marginal cost is the point where all of the profits from the previous units are combined. At this point, total cost is not at its lowest, and total revenue is not the greatest, but are farthest away from each other, which is represented in the graphs attached. It is true that in the less quantity level of the graph revenue exceeds cost, however, the profit at MR=MC is far more than any of the units produced. To the right of MR=MC, total costs exceed total revenue. The firm would spend more money on workers, resources, and the production of goods, and not get a  great profit back. Once the quantity of goods produced passes the point where MR=MC, the firm not only does not make a great profit, but after a while, it loses the money that the company has already, and soon the company would go into debt. The point of profit maximization and loss minimization is the ideal point of production because if the firm was to produce more, all previous profit would be lost and the firm could possibly close down. As shown in the graphs attached, the profit depletes until the point where money is being taken from the firm just to produce more. When the firm cuts down its production and gets to the point of MR=MC again, the profit will once again be maximized. To conclude, the point of loss minimization and profit maximization is where marginal revenue equals marginal costs. This way, all profit from previous units sold is combined for a large profit and all costs do not exceed the total revenue. The firm should always produce at the point where MR=MC. If they move to the left or right of this point, total profit would drop. As the change in total revenue changes, so does the cost of production. The optimal point of production is when both of these are equal to each other. The graphs attached show how profit is still being made on other points of the curve, but MR=MC is the greatest. If a firm wants to increase revenue and profit, the best bet is to produce where marginal return is equal to marginal cost.

Html and How it Works :: Essays Papers

Html and How it Works There are almost 300,000 Aborigines in Australia. About 34,500 live in Sydney. There is debate about when Aborigines migrated to Australia from Papua New Guinea and the Indonesian archipelago. There is evidence of occupation about 50,000 to 60,000 years ago. The earliest archaeological evidence of Aboriginal occupation of the Sydney area is 15,000 years ago at Emu Plains in Sydney's west. Captain Cook guessed that the population of Aborigines for all of Australia would have been about 150,000. Recent estimates are that the Aboriginal population was about 750,000 in 1788. Governor Phillip guessed that there were no more that 1500 Aborigines living in the Sydney area. The first official census of Aborigines did not take place until 1971. Aboriginal people throughout the Sydney area identified themselves more strongly as members of smaller clans or bands. There were an estimated 29 different bands liming in the Sydney area, and between seven and eleven based near the shares of Sydney Harbour and the nearby coast. Each band had approximately fifty members. The general collection of beliefs is known as the Dreaming. The Dreaming not only explains the past and how the present came to be, but also prescribes codes of conduct for important events. When Arthur Phillip was given his instructions from the British government before the First Fleet sailed, he was not instructed to negotiate or enter into treaties with the Aborigines for the use of purchase of land. To Europeans, possession or title to land depended on working or cultivating it. Cook had observed on his journey on the Endeavour that Aborigines did not work or improve the land, so that it was terra nullius, and therefore able to be claimed by the British government. The official instructions from the King, however, ordered Phillip to treat the Aborigines in a conciliatory fashion and that any wrongdoing towards them was to be punished. The critical difference between European and Aboriginal notions of land possession and ownership was that, for the Aborigines, there was no conception of the right of an individual to hold property to the exclusion of everyone else. For the colonists, there was no conception of anything else. Aborigines were closely connected to the land, but in a wider and more collective sense, not in the personal legalistic manner land was possessed in European society. From the outset, the stage was set for a fundamental and irreconcilable clash between cultures, which would soon impoverish the lives of Australia's indigenous people.

Grill Rite Case Study Essay

There are five issues that are relevant.†¨The president’s stance on steady output conflicts with seasonal demand. However, it is unlikely that this will change. The main problem is inventory management. One advantage of having a single, centralized warehouse is the lower need for safety stock due to the canceling effect of random variability in orders from the various regions. Conversely, with separate warehouses, each warehouse needs a relatively larger safety stock to guard against variations in demand. This would enable the centralized warehouse to see what the regional warehouses are stocking and also review their historical demand patterns and future customer forecasts. The fact that the regional warehouses have increased their order size but customer service has not improved reflects that the â€Å"wrong† inventory items are very likely being ordered. Relevant costs would include transaction costs, transportation costs, versus the potential increase in profit by making up a shortage. Other issues include the following: ISSUE ONE: One alternative might be to identify a complementary product that would offset seasonal demand for electric grills. ISSUE TWO: What is needed is overall control of the system that would take into account seasonal variations in demand and achieve a better match between regional demand and supply. This might involve making or improving regional forecasts. In any case, improved system visibility is essential: direct access to regional warehouse data by the main warehouse is needed in order to be able to coordinate and set priorities on inventory shipments to regional warehouses. ISSUE THREE: It is also necessary to examine the feasibility of shipping from one warehouse to another when a shortage occurs. ISSUE FOUR: Develop a policy regarding shipments from the main warehouse (to end user customers versus regional warehouses). ISSUE FIVE: Invest in software (distribution resource planning [DRP]) which would provide desired visibility and also enable the main warehouse manager to â€Å"push† inventory where it is needed versus regional warehouse managers â€Å"pulling† inventory where they believe they need inventory, which may not be correct.

America s Present Economic State, Citizens Are Looking...

In America’s present economic state, citizens are looking for one thing: convenience. The American lifestyle has evolved into a quick pace, overwhelming schedule with Americans looking to fulfill their needs through affordable and easily reachable means. There has been an increased approval in fast food and convenience store establishments that provide swift and stimulating products. It is the inexpensive and easy way to purchase these â€Å"goods† that is slowly deterring the well-being of our country. The reason behind the low prices of such unhealthy choices provided by fast food restaurants and convenience stores is attributed to the subsidizing of producers of companies making the junk food. These companies such as McDonald’s, Coke, Pepsi, and Burger King contribute to the amplified rates of diabetes and obesity. Therefore a sensible solution is to tax the companies’ goods to make them less attractive to consumers who sequentially will lead improved l ife in buying less expensive, healthier foods. The enlarged percent of obesity amongst Americans is amazing. The National Center for Health Statistics recently reported, â€Å"the most recent national data on obesity prevalence among U.S. adults, adolescents, and children show that more than one-third of adults and almost seventeen percent of children and adolescents were obese in 2009-2010† (NCHS Data Brief, 6). Thinking back to humbler times when there was no junk food, people lived a healthier existence but wereShow MoreRelatedAmerica Is The Immigration Policy.in Light Of The Presidential Election1164 Words   |  5 PagesMadaline Quimby Mr. Gibbs English Comp 2 9 April 2017 USA and Immigration One of the most highly talked about subject in America is the immigration policy.In light of the presidential election people are concerned about how President Trump will affect America s immigration policies.Many opinions are circling the world of media,but this division America comes at the height of racial tension as well causing America to become a volcano just waiting for a chance to erupt. In all honesty many doRead MoreWhat Factors During The Colonial Period Essay1636 Words   |  7 Pagesfrom the British Empire? Be sure to discuss the economic, political, and cultural aspects of the American Revolution. 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