Profit maximisation

• What is profit?

  The reward for risk taking in the form of money
• What is profit maximisation?

  The point at which MC = MR
• What is marginal revenue?

  The additional revenue gained from selling one more unit of a product
• What is marginal cost?

  The additional cost of producing one more unit of a product
• What is marginal profit?

  Marginal revenue - marginal cost
• What is positive marginal profit?

  Where the marginal revenue is more than the marginal cost, meaning firms would increase output
• What is negative marginal profit?

  Where the marginal revenue is less than the marginal cost, meaning that firms would decrease output
• When is profit equilibrium reached?

  When the marginal cost equals the marginal revenue, meaning that firms wouldn't increase or decrease output as either option would decrease their profitability