Hello
The title says it all I guess? In theoretical economics, marginal cost has to equal marginal revenue in order to maximize profit. But this intuitively doesnt make sense to me Because that would just mean you’d have a profit of 0.
Is this somehow only applicable for monopolies?
Could someone clarify this reasoning please?
In: 2
It means you keep making more and more units, with supply/demand shift driving down price, until you break even on a per-unit (marginal) basis. The unit before the last one, you made a penny, the unit before that 2 cents, etc. Those last couple pennies of profit still grew overall profit, when there was no more profit to be had you stop.
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