Maximizing Profit Practice

Mr. Clifford introduces perfect competition and profit maximization, focusing on practice. The video reviews the profit maximizing rule and applies it using a cost chart for a competitive firm selling oranges. It explains fixed and variable costs, and how to calculate marginal and total costs. The video guides viewers on determining the optimal production quantity for maximizing profit, calculating total revenue and profit, and understanding the concept of profit maximization.

What is the fixed cost of producing any number of crates of oranges?

• $40

• $20

• $30

• $10

In a perfectly competitive market, what is the relationship between marginal revenue and price?

• Marginal revenue is unrelated to price

• Marginal revenue is always more than price

• Marginal revenue is equal to price

• Marginal revenue is always less than price

How many units should a firm produce to maximize profit if the marginal cost of the 6th unit is $40 and the marginal revenue is $30?

• 6 units

• 7 units

• 4 units

• 5 units

What is the total revenue if a firm sells 5 units at a price of $30 each?

• $150

• $120

• $130

• $140

Why is it incorrect to say a firm only makes profit at the 5th unit?

• Because profit is only made at the 6th unit

• Because profit is made at multiple units, not just the 5th

• Because profit is not made at any unit

• Because profit is only made at the 4th unit