The red line denotes marginal cost and this also increases as the production increases. The shaded region is the profits of the firm. The price line is also the marginal revenue and the average revenue for the firm. So, the company earns profit only when marginal cost is less than the marginal revenue (the area denoted by the shaded portion). When marginal cost increases more than the marginal revenue,

Economics Discuss the alternative theories to profit maximization ranging from perfect competition to strict monopolies and discuss how these two special conditions are theoretical limits In economics, profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. The total revenue -- total cost method relies on the fact that profit equals revenue minus cost, and

Microeconomics Over the last few years, it is evident that the airline industry in the U.S. has been experiencing long standing as well as novel challenges (The American Antitrust Institute, 2012). These includes the increase in the price of fuel, slowing demand for air travel and pressures to expand globally. Consolidation among various airlines across the country is the most common remedy that most of the airline firms are applying. In

Monopoly Market Characteristics of Perfectly Competitive Industry A perfectly competitive market is characterized as the market in which the firms as well as the consumers are the price takers. A price taking producer implies to the producer whose actions and decisions are not affected by the market forces but are only affected by the choice of the consumers. Similarly a price taking consumer refers to the consumers whose preferences are not homogenous

Potato Chip Industry Given that the new company is now run as a monopoly, how will this benefit the stakeholders involved, such as the government, businesses, and consumers? The conventional economic case in opposition to a monopoly is that, since the cost structure is the same, a monopolistic business will manufacture goods at a decreased output in order to charge higher prices. The opposite is true in the case of a competitive

market structures and the pricing strategies which are specifically related to each of them. The introductory section of the paper gives an overview of the four major types of market structures and explains the main features which draw distinguishing lines between them. These major types of market structures are perfect competition, monopolistic competition, monopoly, and oligopoly. The second section discusses the pricing strategies which are used by competitors in