Economists normally assume that the goal of a firm is to

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Business

Annalise Beard

26 October, 17:16

Economists normally assume that the goal of a firm is to

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Edith Mckee · Answer 1

Profit Maximisation

Explanation:

Profit is the difference between total revenue (receipts) from sale & total cost (expenditure) on production.

Total Revenue = Price x Quantity; Total Cost = Average Cost x Quantity

Economists study all the producer behaviour, based on assumption that : Goal of firm is Profit Maximisation.

Maximising Profit implies maximising the difference between Total Revenue & Total Cost [ TR - TC]. This further leads to producer equilibrium rule of Marginal Revenue = Marginal Cost [MR = MC]; i. e additional revenue per unit sold equals additional cost per unit production.