Profit
maximizing
foundation of
Econ
Discussion 8
100 A
Maximine
Goal:
q
profitsee
->
G ->
firm
industry
Max H:TR-TC
:-
e
w
MR
MC
mostimportantthing
MR MC 0
=>
=
-
Ms
ultimate
↑
of
goal
TR
Notation:
Epi
Firms:
ecor
any
firm
P(q) =
=
demands
price
quantity
on
x
-
s
Perfect competition.
DHomogeneous
②
goods
Many buyers
and sellers
11
W
Firms
Free
entry
no
In PC:
LR
are
and
price
takers
exit
H
Economic TT.
PCGSbecause
quantity
=
5
A
Numerical:
p
$27
=
TC: 20
What is
D
Find MR
492 39
+
g*?
=
+
doesn't matter
to
learn
in
econ
②
Find MC
nc
d(20492 3y)
2
=
83:89th
+
=
=
2
BSCt MR MC
=
27
level
optimal
of
3
89
consumption
+
=
8g
=>
*
24
=
773
=>
profit
⑭
What
It?
is the
T:TR-TC
eq.
IRP,?23:
65
+* 81
=
⑤ What
↳
->
⑥
-
Firms will
What is
↳
->
=
happen
will
pH,
7/16
65
LR?
in
enter
I* 0
it
until
=
P=$19?
find
π*
*
g
should the firm
operate
in
the SR?
1:Find MR
Step TR
P(G):199
MR=
1977
=
R 19:
=
Step
Step
MC
2:Find
3
d<
9):8g e
:
3:Set
MR MC
=
19
=
2
Step
4:TR*
TCF
p* 19(2)
=
=
194
=
-
40
4(2)
+
2
28
=
3(3))
+
=
4:π*
E
-
compare
to
TCq=0)
#Cg*)
4(0) 320)
0)
*2g
=
0
=
-(20
+TCG 0) < π(g*
↳ So
stay in
=
+
+
z)
=
in
business
=
-
2c