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TOTAL REVENUE AND TOTAL COST: A profit-maximizing firm produces output where the difference between total revenue and total cost, that is economic profit, is the greatest. This total revenue and total cost approach to identifying profit-maximizing production can be accomplished using either a table of numbers of a set of curves. However, the end result is the same. Profit-maximizing production takes place at the quantity generating the greatest difference between total revenue and total cost. An added benefit of performing the analysis with curves, however, is the observation that profit-maximizing production occurs where the slopes of the total revenue and total cost curves are equal.
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AGGREGATE DEMAND CURVE A graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand (AD) curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the long-run aggregate supply curve and/or the short-run aggregate supply curve. The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate, real-balance, and net-export effects.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time watching infomercials trying to buy either a cell phone case or a pair of designer sunglasses. Be on the lookout for attractive cable television service repair people.
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This isn't me! What am I?
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"Carpe diem! Rejoice while you are alive; enjoy the day; live life to the fullest; make the most of what you have. It is later than you think." -- Horace, Ancient Roman poet
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SOFFEX
Swiss Options and Financial Futures Exchange
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