Answer to Question #219104 in Microeconomics for De prince polymath

Question

Discuss your observation x-TR-TC

Answer 1

In the graph, the X-axis in the depicts output levels, while Y-axis depicts profits and total costs and profits. TR represents the Total Revenue Curve, whereas TC represents Total Cost Curve. The maximum distance between TC and TR is found at P that is the equilibrium point.

Moreover, before point P' and after point P”, TR<TC can be observed. Based on the idea, the producer needs to decide between M'M" and P'P”. A tangent drawn towards TC tends to be parallel to TR at the P point. The slope of TC tends to be equal to the slope of TR at the P point .