Maximizing Profit and the Average Cost Curve

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Being able to predict your company’s profit is a very useful tool. In this video, we introduce the third concept you need to maximize profit - average cost. When looked at in conjunction with the marginal revenue and marginal cost, the average cost curve will show you how to accurately predict how much profit you can make!
The usefulness of these tools does not stop there. Sometimes, you can’t make a profit. You’ll have to take a loss. These tools can also show you how to minimize losses, and make decisions on whether a company should enter or exit an industry.
We also define terms such as zero profits and sunk costs in this video.
Microeconomics Course: bit.ly/20VablY
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30 июн 2024

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Комментарии : 28

@TheHumbleThinker 4 года назад

I think I am supposed to be the next non-native English-speaker to praise your magnificent channel!

@12white1 2 года назад

You guy's are soooooo much better than my teacher by explainijng econimics. I've watched your videos for less than one week and i learned more than in the 14 weeks of my semester. Crazy! And it makes fun to learn it with you. Not like in the class

@Elmina_ 5 лет назад

Thank you so much this was the best explanation I have ever seen. It was quite comprehensible. :)

@mundheral.askari3450 4 года назад

You guys are LEGENDS ,Thank you so much !!

@marishaghosh6611 3 года назад

I'm gonna take up economics in college and was clearing some basic concepts. This really helped, thanks a lot!

@rovercoupe7104 10 месяцев назад

How’s it going?

@sairamkoruprolu8729 4 года назад

I found your channel very helpful, thank you so much!

@ghiasuddintajwhal 5 лет назад

Very well explained, many thanks.

@CODMASTA 6 лет назад

I really hate economics, but this video was perfect in explanation for a dummy like me. great lecture! thank you!!

@inderjeetsingh7770 2 года назад

I have watched this video plus two videos profit maximization in monopoly and perfect competition of your channel. I never understood these concepts before. Your these three videos done wonder for me. 👍👍✌✌🙏🙏👌👌

@andybearvlog6140 9 месяцев назад

This is so much better than my Uni material! Thank you.

@leonaphoria6169 9 месяцев назад

thank u for existing on this earth, we love u

@gregoirelecomte1007 9 месяцев назад

This is so clear and well made. Congrats! Very helpful

@gregoirelecomte1007 9 месяцев назад

And thank you

@yogeshkumarchaudhary5681 3 года назад

great work.

@john_mckinney 6 лет назад

Thanks for the explaination. Question: why would a firm exit if the expected price was below AC for an extended time? Wouldn’t it still maximize profits (minimize loss) as long as price was above MC and therefore keep producing?

@loganwashere24 4 года назад

Bring the economics lady back!

@aliciaflorrick6359 5 лет назад

Great video! From where do you source the data to determine whether to enter or exit

@murangigichovi8058 4 года назад

Goood stuff keep it up!

@grantgibson9645 2 года назад

Suppose that the market price for a good is $15 and the MC curve goes through $15 at 2 different Quantities. Ex: The curve starts at $20 and goes down to $12 (passes through 15) and then goes up to $40 (passes through 15). Would I want to produce the quantity that is at $15 when it is going down, or when it goes back up?

@andreasaristeidou5647 5 лет назад

Good to know that Zero Profits is basically "normal" profits because up until this video it didn't make sense!

@assartsandcrafts8723 4 года назад

How to show profit condition under perfect competitive market without using average cost curve??

@sivonparansun 8 лет назад

Zero Profits =maximize?

@felixzhang9455 7 лет назад

yes because of opportunity cost.

@jesusosegueda422 6 лет назад

Yes, but that is on the long run. If there is perfect competition, and some firms are making a profit, in the long run, other firms will enter the industry. This is an increase in supply (the whole curve). That will make the price go down, for many of these companies will agree to sell at a lower price in order to sell more. Eventually, firms stop entering the industry when the price is such that there are no profits for no firm.

@crocop1582 4 года назад

@@jesusosegueda422 In perfect competition the market price(Industry=Price Maker) where Minority of Sellers or Buyers cannot impact on the Price and so the price remains same for homogeneous products. When Firms are making profit on a given market price producing a homogeneous product,New firms enter to make profit seeing P>AC and new entries will be there till P=minAC and that will be the Zero Profit or Normal Profit for Long Run of an industry.

@woahzuh532 2 года назад

zero *economic* profit, which takes into account total costs (implicit and explicit - opportunity costs). economists calculate profit differently than accountants