Q

Costs MC

AVC

ATC

Microeconomics at a Glance

Prof. Dr. Manuel Salas-Velasco

Profit maximization

Microeconomics at a Glance Prof. Dr. Manuel Salas-Velasco 2

𝜋 𝑞 = 𝑇𝑅(𝑞) − 𝑇𝐶(𝑞)-60

-30

0

30

60

90

120

0 3 6 9 12 15 18

EU

RO

S

QUANTITY

Profit Total Revenues Total Costs

It is shown graphically as the

point where the total revenue and

total cost curves meet

BREAK-EVEN POINT (BEP)

REVENUES = COSTS (*)

There is no profit or loss

(*) Opportunity costs have been “paid”

Our profit function equation will be as follows:

Profit is equal to total revenue (TR) minus total cost (TC)

The profit-maximizing

output level is the one

at which the total profit

curve is at its maximum

Microeconomics at a Glance Prof. Dr. Manuel Salas-Velasco 3

Please, check these slides from time to time because I will be enlarging the file in the coming months. Thanks