EC 100

MICRO

COMPETITION

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Profit  Maximization
under
Perfect Competition

Total Revenue   -   Total Cost   =  Profit

 

   q  ...  quantity of output

  p  ...  price

  TR ... total revenue

  TC ... total cost

  PROF...profit

  TR = p.q

  PROF  =  TR - TC

Total Revenue when price is  $10  

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 q

TR

 p = 10

0

0

1

10

2

20

3

30

4

40

5

50

6

60

7

70

8

80

9

90

10

100

 

Total Cost

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down

  

 q

TC

0

10

1

10

2

12

3

16

4

22

5

30

6

40

7

52

8

66

9

82

10

100

 

Profit

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down

  

 q

TR

TC

PROF

 

0

0

10

-100

1

10

10

0

2

20

12

8

3

30

16

14

4

40

22

18

5

50

30

20

6

60

40

20

7

70

52

18

8

80

66

14

9

90

82

8

10

100

100

0