Month: February 2021

By breakeven analysis we mean a determination of whether or not a firm can earn a positive (or zero) profit given its demand curve and its cost structure.  By shutdown analysis we me a determination of whether or not a firm should continue to operate in the short run and in the long run given…

This will be a short article, mercifully. Accounting profit is the difference between accounting revenue and accounting cost, while economic profit is the difference between economic revenue and economic cost.  (I know: not very exciting.  Hang in there; it gets better.) Accounting revenue and economic revenue are the same: total revenue.  The amount you receive…

Let’s get the terminology out of the way first. “Marginal” means “for the next unit”.  Thus: Marginal Revenue: The increase in revenue (sales) from producing and selling one additional unit of whatever it is you’re producing and selling Marginal Cost: The increase in cost (expenses) from producing and selling one additional unit of whatever it…