Answer to Question #127130 in Microeconomics for Esihle

Question

Name and explain the two rules for profit maximisation

Answer 1

The shut-down is the first rule of profit maximization and it states that a firm will increase production only when the total revenue is equal to, or greater than, its total production cost. While the second rule states that a firm will only produce at its optimum output at which the marginal cost is equal to marginal revenue.