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The change in the revenue

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1. Is is possible to maximize sales revenue or market share and profit at the same time? Why?

2. Are all demain curves downward sloping ? Why? What is the meaning for firms of demand curves that do or do not slope downward?

3. If the firm reduces the price for its product, will it decrease its revenue? Why?

4. Are all relevant per unit cost curves upwards sloping? Why? What is the meaning for firms of upward or downward sloping per unit cost curves?

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Solution Summary

What is the meaning for firms of upward or downward sloping per unit cost curves?

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1. Is it possible to maximize sales revenue or market share and profit at te same time? Why?

First, let's take a look at the firm's profit maximization decision.
Since Profit(Q) = TR - TC
Then the first order condition for Profit maximization is dProfit / dQ = 0, i.e.,
dTR/dQ - dTC/dQ = 0
MR - MC = 0
MR = MC
Thus, it is necessary for the firm to set marginal revenue and marginal cost equal.

On the other hand, the condition for maximizing sales revenue is MR = 0.

Now if the firm wants to max revenue and profit at the same time, it should be satisfied that MR = MC = 0
Or, the ...

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