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I am trying to figure out these last three questions and I provided some study notes of mine. Could someone please provide me with thorough and correct explanations for these three questions. Thank you!

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1. Whenever MR is more than MC, it means that the firm can increase profits by increasing output. If it is less, then the firm can increase profits by decreasing output. Thus the firm settles at MC=MR so that it has no incentive either to increase or decrease output.

Here is an example:

Output 1 2 3 4 5 6 7 8 9
MC 10 11 13 16 20 25 31 38 48
MR 50 45 40 35 30 25 20 15 10

The profit maximizing level of output occurs when marginal cost is equal to marginal revenue. This occurs at an output of six units, when both marginal cost and marginal revenue is 25. If the firm continues to produce after this point, its profit will decline by 11, since MC is 11 greater than MR at an output of 7.

The MC curve is a U, and here we see that it ...

Solution Summary

Questions related to optimal pricing and quantity for profit maximization

See Also This Related BrainMass Solution

Business Research for Optimal Decision Making

Think about a recent business decision you have made that was either a success or a failure. Your supervisor asked you to email him/her a self-evaluation of this decision as part of your yearly evaluation. You are to be as objective and open minded as possible. Analyze your decision using Bazerman's six steps as a guide: define the problem, identify the criteria, weigh the criteria, generate alternatives, rate each alternative on each criterion, compute the optimal decision. Make sure your email addresses the following issues:

Were there any discrepancies between the calculated "optimal" decision and your actual (or favored) decision? If so, what might account for the discrepancies?

What problems, if any, did you encounter when completing the steps? (For example, were you able to compute an optimal decision? If not, why not?)

Are there any weaknesses in the "fully rational" model of decision-making? If so, what are they?


Bazerman, M. H. (2006). Judgment in Managerial Decision Making (6th ed.). New York: Wiley.

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