{"id":613,"date":"2011-01-13T04:01:54","date_gmt":"2011-01-13T10:01:54","guid":{"rendered":"http:\/\/opengecko.com\/economics\/profit\/"},"modified":"2011-01-13T04:01:54","modified_gmt":"2011-01-13T10:01:54","slug":"profit","status":"publish","type":"post","link":"https:\/\/opengecko.com\/geckoview\/economics\/profit\/","title":{"rendered":"Profit"},"content":{"rendered":"<p><font size=\"4\">We need to understand this according to the syllabus:<\/font><\/p>\n<ul>\n<li><font size=\"4\">Distinction between normal (zero) and supernormal (abnormal) profit<\/font><\/li>\n<li><font size=\"4\">Profit maximization in terms of total revenue and total costs, and in terms of marginal        <br \/>revenue and marginal cost<\/font><\/li>\n<li><font size=\"4\">Profit maximization assumed to be the main goal of firms but other goals exist (sales volume maximization, revenue maximization, environmental concerns)<\/font><\/li>\n<\/ul>\n<p><font size=\"4\">First review the difference between normal and supernormal (or abnormal) profit explained in this video by <\/font><a href=\"http:\/\/www.youtube.com\/user\/mjmfoodie\"><strong><font size=\"4\">mjmfoodie<\/font><\/strong><\/a><font size=\"4\">:<\/font><\/p>\n<div style=\"padding-bottom: 0px; margin: 0px; padding-left: 0px; padding-right: 0px; display: inline; float: none; padding-top: 0px\" id=\"scid:5737277B-5D6D-4f48-ABFC-DD9C333F4C5D:bd6f5aa9-76dc-4c9b-98fc-6e93710b3777\" class=\"wlWriterEditableSmartContent\">\n<div><object width=\"480\" height=\"385\"><param name=\"movie\" value=\"http:\/\/www.youtube.com\/v\/FgttpKZZz7o?hl=en&amp;hd=1\"><\/param><embed src=\"http:\/\/www.youtube.com\/v\/FgttpKZZz7o?hl=en&amp;hd=1\" type=\"application\/x-shockwave-flash\" width=\"480\" height=\"385\"><\/embed><\/object><\/div>\n<\/div>\n<p><font size=\"4\">Then, <\/font><a href=\"http:\/\/www.youtube.com\/user\/mjmfoodie\"><strong><font size=\"4\">mjmfoodie<\/font><\/strong><\/a><font size=\"4\"> also introduces us to profit maximisation \u201cin terms of total revenue and total costs, and in terms of marginal revenue and marginal cost\u201d (IB Economics syllabus):<\/font><\/p>\n<div style=\"padding-bottom: 0px; margin: 0px; padding-left: 0px; padding-right: 0px; display: inline; float: none; padding-top: 0px\" id=\"scid:5737277B-5D6D-4f48-ABFC-DD9C333F4C5D:0abee5b8-0b3a-4834-a2cb-9716873c1900\" class=\"wlWriterEditableSmartContent\">\n<div><object width=\"480\" height=\"385\"><param name=\"movie\" value=\"http:\/\/www.youtube.com\/v\/J_tdZZkRvbg?hl=en&amp;hd=1\"><\/param><embed src=\"http:\/\/www.youtube.com\/v\/J_tdZZkRvbg?hl=en&amp;hd=1\" type=\"application\/x-shockwave-flash\" width=\"480\" height=\"385\"><\/embed><\/object><\/div>\n<\/div>\n<p><font size=\"4\">The MC=MR is a golden rule which you really need to understand and remember. See it action in this fast-aced example by <\/font><a href=\"http:\/\/www.youtube.com\/user\/ACDCLeadership\"><strong><font size=\"4\">ACDCLeadership<\/font><\/strong><\/a><font size=\"4\">:<\/font><\/p>\n<div style=\"padding-bottom: 0px; margin: 0px; padding-left: 0px; padding-right: 0px; display: inline; float: none; padding-top: 0px\" id=\"scid:5737277B-5D6D-4f48-ABFC-DD9C333F4C5D:2d6bf09e-3546-4084-b9f4-bac38307af19\" class=\"wlWriterEditableSmartContent\">\n<div><object width=\"480\" height=\"385\"><param name=\"movie\" value=\"http:\/\/www.youtube.com\/v\/qaQRM6WIxpA?hl=en&amp;hd=1\"><\/param><embed src=\"http:\/\/www.youtube.com\/v\/qaQRM6WIxpA?hl=en&amp;hd=1\" type=\"application\/x-shockwave-flash\" width=\"480\" height=\"385\"><\/embed><\/object><\/div>\n<\/div>\n<p><font size=\"4\">For a light hearted recap, SpongeBob Squarepants and Mr Crab discuss these principles (thanks to <\/font><a href=\"http:\/\/www.youtube.com\/user\/EdwardBahaw\"><strong><font size=\"4\">EdwardBahaw<\/font><\/strong><\/a><font size=\"4\">):<\/font><\/p>\n<div style=\"padding-bottom: 0px; margin: 0px; padding-left: 0px; padding-right: 0px; display: inline; float: none; padding-top: 0px\" id=\"scid:5737277B-5D6D-4f48-ABFC-DD9C333F4C5D:c666722e-c649-42fa-b29a-3fb06c09c95c\" class=\"wlWriterEditableSmartContent\">\n<div><object width=\"480\" height=\"385\"><param name=\"movie\" value=\"http:\/\/www.youtube.com\/v\/PyrVJEf3QT4?hl=en&amp;hd=1\"><\/param><embed src=\"http:\/\/www.youtube.com\/v\/PyrVJEf3QT4?hl=en&amp;hd=1\" type=\"application\/x-shockwave-flash\" width=\"480\" height=\"385\"><\/embed><\/object><\/div>\n<\/div>\n<p><font size=\"4\">We must remember however, that profit maximisation is assumed to be the number one goal of firms. What about other goals?<\/font><\/p>\n<p><font size=\"4\">Research \/ Discuss what other goals a firm might have \u2013 share them with others in your class.<\/font><\/p>\n<p><font size=\"4\">Now, for each of the additional goals, discuss whether or not they in fact do in some way link to profict maximisation.<\/font><\/p>\n<p><a href=\"http:\/\/www.youtube.com\/user\/pajholden\"><strong><font size=\"4\">pajholden<\/font><\/strong><\/a><font size=\"4\"> demonstrates that the profit maximising level can be different from output maximising level. Watch the video here:<\/font><\/p>\n<h3><a href=\"http:\/\/www.youtube.com\/watch?v=JjjvQSmeWGQ\" target=\"_blank\">objectives of firms<\/a> <\/h3>\n<p><font size=\"4\"><\/font><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We need to understand this according to the syllabus: Distinction between normal (zero) and supernormal (abnormal) profit Profit maximization in terms of total revenue and total costs, and in terms of marginal revenue and marginal cost Profit maximization assumed to be the main goal of firms but other goals exist (sales volume maximization, revenue maximization,&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,10],"tags":[197,70,190],"class_list":["post-613","post","type-post","status-publish","format-standard","hentry","category-economics","category-ib-economics","tag-microeconomics-2","tag-profit","tag-theory-of-the-firm"],"_links":{"self":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts\/613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/comments?post=613"}],"version-history":[{"count":0,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/posts\/613\/revisions"}],"wp:attachment":[{"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/media?parent=613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/categories?post=613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/opengecko.com\/geckoview\/wp-json\/wp\/v2\/tags?post=613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}