ECO 605 Assignment 3.1: The Supply Curve Define total revenue (TR), marginal revenue (MR), the profit maximizing rule, and the output-maximization rule for both single investor-owned firms and tax-exempt agencies. Calculate marginal revenue (MR), marginal cost (MC), and average total cost (ATC). Identify profit-maximizing and output-maximizing levels of output. Explain what happens to a supply curve when the quality of a product is increased. Part I: Single Investor–Owned Firm

ECO 605 Assignment 3.1: The Supply Curve Define total revenue (TR), marginal revenue (MR), the profit maximizing rule, and the output-maximization rule for both single investor-owned firms and tax-exempt agencies. Calculate marginal revenue (MR), marginal cost (MC), and average total cost (ATC). Identify profit-maximizing and output-maximizing levels of output. Explain what happens to a supply curve when the quality of a product is increased. Part I: Single Investor–Owned Firm

Part I: Single Investor–Owned Firm

Financial activities in a given firm is characterized by different factors. Financial managers have the responsibility of ensuring that all these factors are taken into consideration for the overall firm’s viability. In most cases, financial managers have a challenging and a complex job trying to ensure profit maximization through the management of marginal revenues and total revenues. They always analyze financial data in relation to the above factors, monitor that financial status of the firm, prepare and enhance the implementation of the plans. Understanding total revenues, marginal revenues, and the profit maximization tool is necessary in ensuring effective financial management systems. Understanding the mathematical concepts of these factors is also necessary in enhancing deeper understanding of these concepts. The purpose of this assignment is to define total revenue (TR), marginal revenue (MR), and profit-maximization and to calculate MR, MC, and ATC for the table given.

Total Revenue: Total revenue, or TR for short is the total flow of income from selling a given quantity at an agreed upon price (Helmold, 2020). The value can be found by multiplying this number with both variables-the cost per unit sold as well as how many units have been produced; then taking out taxes that are owed on said products before finally adding them all together into one big sum which we call ‘TR’. The goal of any business is to make money (Ertugrul & Sahin, 2020). That’s why it pays off for a company in order have high revenue, which will lead them having more profit down the line when they distribute these funds among themselves or use some as an investment towards building up new technology that can help grow your company even further (Helmold, 2020). The total revenue can also be defined as the amount of money that a company brings in; it is calculated by multiplying how many items they sold with what each one cost to make or buy, then adding any additional taxes imposed on top like sales tax if applicable.

Marginal Revenue (MR): Marginal revenue is the extra money you get when your output changes by one unit. It’s both positive and negative- if it has a lot of MR, then there will be more change in TR following an increase from 1 to 2 units; however small those increases may seem at first glance (Bockelie & Belobaba, 2018). When the amount of money that a company is paid for every additional unit produced increases faster than its cost, it will be able to make more profit. This means there are opportunities available with production if they do not expand enough in order meet demand (Nomidis, 2018). Marginal revenue refers only one type which can either get higher or lower but always involves taking into account both variables.

Profit-Maximizing Rule: Profit-maximization rule is defined as the approaches that define both long run and short run processes by which a firm can determine the input, prices, and output levels that leads to the maximization of profits (Mert, 2018). The profit-maximizing rule is to maximize profits, which means that firms will take into account the opportunity cost of any given production decision. This includes all costs and fees associated with producing a good or service as well as any revenue lost due to lower sales volumes. It also takes into account direct expenses such as raw materials and labor but not taxes or interest on debt financing, because these are irrelevant for making decisions about how much output should be produced at any point in time.

Calculation of MR, MC, and ATC

Table 3.1.

Profit-maxim