Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...

A rational business's main goal is always to maximize profits. As complicated as business processes can be, the end goal always remains reaching the maximum profit. There are many ways a company has ...

Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Timothy Li is a consultant, accountant, and ...

The world of microeconomics and business decision-making hinges upon a key concept: marginal cost. In the simplest terms, marginal cost represents the expense incurred to produce an additional unit of ...

Marginal cost refers to the change in total cost arising from the production of one additional unit. For example, in a manufacturing firm, the marginal cost will give a measure of the change in total ...

Marginal revenue measures extra income from producing one more unit. Compare marginal revenue and cost to decide on production adjustments. Track marginal revenue changes to set optimal production and ...

1. If marginal product is decreasing, then average product must also be decreasing. 2. For a fixed-proportion technology, inputs cannot be substituted for each other in production. 3. The marginal ...

Costs are a critical variable to consider when plotting business strategy. After all, if you can't recover the expenses required to create your product through revenue and profit, then the business ...

Total revenue is the amount of money that a business brings in by selling its goods or services at a given price. It is the starting point of a company’s income statement, which determines how much ...

Marginal cost is the added expense of producing one more unit. A horizontal marginal cost curve indicates consistent production costs. Businesses may aim to maintain horizontal costs to stabilize ...