Question

What is Total Revenue-Total Cost approach?

Answer 1

Answer:

Total Revenue – Total Cost (TR-TC) Approach – which has two conditions: The difference between TR and TC is maximum. Even if one more unit of output is produced, then the profit falls. In other words, the marginal cost becomes higher than the marginal revenue if one more unit is produced.............

Answer 2

When the difference between total revenue and the total cost is maximum then we use the total revenue-total cost approach.

What are the conditions for the Total Revenue-Total Cost approach?

• The marginal cost is more than the marginal revenue
• When the profit is maximum then the firm is in the position of equilibrium
• The output level of the firm is in a position of neither profit nor loss
• When profit and loss is not increased or decrease with the change in the quality of the output
• At the equilibrium point, the distance between total cost and total revenue is maximum