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Eco (Subject) / CMA (Lesson)
- Marginal Profit Marginal revenue minus marginal cost. This is the additional profit that the company would get by producing and selling one more unit.
- Marginal Product (or Marginal Physical Product) The additional output that is produced from adding one additional unit of input.
- Marginal Resource Cost The change in the total cost that results from using one additional unit of a resource.
- Marginal Revenue Product This is the change in total revenue that arises from using one more unit of a resource.
- the point of production and sales that will maximize profit Marginal Revenue = Marginal Cost Sales beyond this point produce a loss on each additional (marginal) item and will decrease the total profit of the firm A firm should expand production so long as the price (marginal revenue) exceeds the marginal cost, since this will cause total profit to increase. Production should stop at the “break-even” unit where price (marginal revenue) equals marginal cost, because if it expands beyond this point, the increasing marginal cost of production will rise above the price (marginal revenue), and profit will decline.
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