Why is the profit maximum when the profit margin is 0?

When marginal income = marginal cost.

, marginal profit.

0, mathematically understood, is the derivative of the profit function at this time.

The value is 0, which is the stationary point of the function.

i.e. extreme points. Either the maximum or the minimum, which does not correspond to economic realities, so the profit function achieves the maximum.

Let's describe in simple terms the relationship between marginal income, marginal cost, marginal profit and profit-related.

Margin refers to the result that an additional unit brings to the business. For example, marginal revenue is the increase in revenue for each additional unit of product sold. Marginal cost and marginal profit have the same meaning (note that marginal profit is the increase in profit for each additional unit of product sold, which must be distinguished from the profit of the enterprise).

Let's talk about the relationship between the four:

On the basis of the original output, the enterprise increases the workload, so that at the beginning, the marginal income is greater than the marginal cost (this should be easy to understand, for example, a student originally scored 60 points, then work hard, get 70 points, and the results achieved are greater than the degree of effort), at this time, the profit of the enterprise will increase with the increase in output.

The enterprise increases production, and at the critical point, the marginal income is equal to the marginal cost, and the profit of the enterprise reaches the maximum. (For example, if the student tries harder, the score increases to the same as his effort, and the score reaches 100 points).

If the enterprise increases production and the marginal cost increases, then the marginal income increase will be less than the marginal cost increase, because the company's resources are fully utilized, and the result of increasing production is not equal to the effort (for example, if the score has reached 100 points, no matter how hard you study, you can't increase the score). At this time, the company's profits will fall instead.

It can be seen that when the marginal income is equal to the marginal cost, the marginal profit is equal to 0, and the profit is the largest.

This conclusion is flawed: it is based on the fact that incremental resources have no impact on the unit price of sales, but according to the law that supply and demand determine **, in essence, the incremental part of resources has an impact on the overall selling price (overall profit).

When marginal income = marginal cost, marginal profit = 0, mathematically understood, at this time the value of the derivative function of the profit function is 0, which is the stationary point of the function, that is, the extreme point, which is either the maximum or the minimum, and the minimum does not conform to economic reality, so the profit function obtains the maximum value at this time.

It can also be understood that when the marginal profit is 0, the profit that can be realized by increasing the minimum unit of income at this time is 0, that is, the profit can no longer be increased, so the profit is the largest at this time.

When the marginal benefit is equal to the marginal cost, it should mean that the benefits and costs generated by the last one of all the products produced, and those that were produced before, are the benefits greater than the costs. At this time, when producing one more, the cost of this one is greater than the benefit, and on the whole, the total profit is reduced.

The premise is that the marginal cost is incremental.

When the marginal cost is equal to the marginal benefit, then the profit of the last product is 0, right?

You misunderstood, the theory of the last product is not 0 but the maximum, in your example 100 is the maximum, over 100 is negative, normal can be understood in this way, you are either making money or losing money, there is no capital protection is 0

In reality, the difference between your expenses and profits can be 0, but there is no return on the time and effort you pay, including the return on the money you make in other fixed income investments, and there is a loss if there is no return.

When the 100th pair of shoes is made, the profit is not zero, but for each additional pair of shoes produced, the increased profit is zero, that is, the marginal profit is zero, you are not right.

You need to understand the word economic profit.

In layman's terms, it means that the use of resources is full and reasonable.

mr=mc is indeed a condition for maximizing profits. In the case of a certain fixed cost, each new production of a product will lead to a decrease in the marginal cost, because the variable cost remains the same, while the average fixed cost decreases, and at this time, the profit of the new product, that is, the marginal profit rises, but when it increases to a certain extent, the marginal profit will decrease due to the limitation of production factors, but when mr=mc, the marginal profit is 0, and the total profit is the largest at this time. Actually, it's easier to think of it this way:

The margin is the new production of a product, as long as the profit of each new product is positive, then the total profit is still increasing, when the profit of the new product is negative, then the total profit must be reduced, so when the marginal benefit = marginal cost, the marginal profit is negative at this time, the total profit is large to the maximum, if it is reproduced, it will be reduced. The marginal return is a (positive-zero-negative) process. Actually, when you go to an economics book and find this model diagram, it's obvious at a glance, but I didn't find it on the Internet, sorry.

Marginal profit refers to the increase in profit by increasing the unit output, if the marginal profit is greater than 0, then increasing the output will increase the profit, the profit will increase with the increase in production, as the marginal profit becomes smaller, the amount of profit increase is getting smaller and smaller, when the marginal profit is 0, the profit no longer increases, therefore, to maximize.

The formula for calculating the marginal profit is: marginal profit (m) = sales revenue (s) - variable cost (v). Profit margin is a reflection of the increase in the sales volume of a product can increase the revenue of the enterprise.

The marginal cost of the sales unit price is the marginal profit, and the marginal profit refers to the increase in profit by increasing the unit output.

The marginal profit of the product is the profit realized by the enterprise. Thus, the concept of profit margin is used to determine whether a product produced by a firm should be discontinued.

As long as there is a marginal profit (i.e., its sales revenue is greater than its variable cost), production should continue.

Judge whether the product structure of the enterprise is reasonable. If all the products produced by the enterprise have marginal profits, it means that the product structure of the enterprise is basically reasonable. The cessation of production of a product must be premised on the premise that the marginal profit from the increase in production of other products is greater than the marginal profit of the discontinued product.

Marginal gain refers to the revenue gained for each additional product.

Marginal cost refers to the increase in the cost of each additional product, first of all, you must know that the marginal cost first decreases and then increases with the expansion of production scale.

When the marginal benefit is greater than the marginal cost, the benefit obtained by the producer by increasing the output of one unit is greater than the cost paid, so it is advantageous for the manufacturer to increase the output, and the total profit will increase accordingly.

When the manufacturer increases the output to a certain extent, the marginal cost begins to increase, before the increase is equal to the marginal benefit, the increase in output will be the increase in total profit, when the marginal cost is greater than the marginal benefit, the benefit of each additional unit of production is less than the cost, more production and more losses.

So only when the marginal cost is equal to the marginal benefit, the total profit is the largest, your mistake is to only consider the unit product, and not the total profit of the volume = the profit per unit of product * the total output.

Marginal cost. Equal to the marginal return.

Why is it the most profitable?

Marginal gain refers to the revenue gained for each additional product.

Marginal cost refers to the increase in the cost of each additional product, first of all, you must know that the marginal cost first decreases and then increases with the expansion of production scale.

When the marginal benefit is greater than the marginal cost, the benefit obtained by the producer by increasing the output of one unit is greater than the cost paid, so it is advantageous for the manufacturer to increase the output, and the total profit return will increase accordingly.

When the manufacturer increases the output to a certain extent, the marginal cost begins to increase, before the increase is equal to the marginal benefit, the increase in output will be the increase in total profit, when the marginal cost is greater than the marginal benefit, the benefit of each additional unit of production is less than the cost, more production and more losses.

So the total profit is greatest only when the marginal cost is equal to the marginal benefit.

Total profit = profit per unit of product * total output.

A necessary condition for maximizing profits.

Yes, the marginal benefit equals the marginal cost.

At this point, the marginal profit is equal to zero, and the profit is maximized.

Under the conditions of perfect competition, the output change of any manufacturer will not affect the first level, the elasticity of demand is unlimited for individual manufacturers, the total income increases in proportion to the increase in sales volume and skin covering, and the marginal income is equal to the average income, which is equal to the first level.

A portion of the income can be used to compensate for fixed costs in production.

Even more than the fixed costs, bringing profits to the enterprise, the marginal benefits can be divided into the following three situations:

1. When sales revenue.

Below the break-even point, the yield is not enough to compensate for the fixed costs.

2. When the sales revenue is equal to the break-even point, the income just compensates for the fixed costs.

3. When the sales revenue is higher than the break-even point, the income will generate profits in addition to compensating for fixed costs.

1. If the marginal return of one unit of output is increased at the end.

Greater than the marginal cost.

This means that increasing production can increase the total profit, so the manufacturer will continue to increase production to achieve the maximum profit target.

2. If the marginal benefit of increasing a unit of output is less than the marginal cost, it means that increasing output not only cannot increase profits, but will cause losses, and then manufacturers will not increase output but reduce output in order to achieve the maximum profit target.

3. Only when the marginal benefit is equal to the marginal cost can the total profit of the manufacturer reach the maximum. Therefore, mr=mc becomes a condition for maximizing profits.

Profit maximization can be expressed in two ways: 1. Total revenue minus total cost to find the maximum; 2. Directly subtract the marginal cost from the marginal benefit. This is because, when the marginal benefit is greater than the marginal cost, the output should be increased, so that the cost of increasing this output is less than the benefit, so that the total benefit increases; Instead, production should be reduced until the marginal benefit is equal to the marginal cost.