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Marginal profit

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Calculus I

Definition

Marginal profit is the derivative of the profit function with respect to quantity. It measures the rate at which profit changes as the quantity produced changes.

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5 Must Know Facts For Your Next Test

  1. Marginal profit is calculated as $\frac{dP}{dq}$, where $P$ is the profit and $q$ is the quantity.
  2. It indicates how much additional profit is made from producing one more unit of a good.
  3. If marginal profit is positive, producing an additional unit increases overall profit; if negative, it decreases overall profit.
  4. Marginal profit can be found by subtracting marginal cost from marginal revenue.
  5. Understanding marginal profit helps businesses make decisions about production levels.

Review Questions

  • How do you calculate marginal profit using derivatives?
  • What does a negative marginal profit indicate about production levels?
  • Explain how marginal cost and marginal revenue relate to marginal profit.

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