MOST IMPORTANT RULE: Firms will maximize profits and minimize losses only at the point where marginal revenue = marginal cost or MR = MC.
Problem: How many dresses to make?
Quantity of Dresses
500*
501
Average Total Cost
200
201
Total Cost
Question 1: You are currently producing 500 dresses at an average total cost of $200. You are the boss and you get a call from a customer that is willing to pay you $450 if you will produce one more dress, 501. Do you accept the order? Use MOST IMPORTANT RULE and use supporting data.
Tags: Help, Microeconomics