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The Company’s Supply Function

In: Production Economics

Author

Listed:
  • Svend Rasmussen

    (University of Copenhagen)

Abstract

As described in Chap. 4, the company maximises its profit (profit maximisation) if production is expanded to the point where the marginal cost (i.e. the incremental cost of producing one more unit) is precisely equal to the product price. The product price is in fact equal to the additional revenue achieved from selling one more product unit. The criterion for profit maximisation can therefore also be expressed as the point where the marginal cost is equal to the marginal revenue.

Suggested Citation

  • Svend Rasmussen, 2013. "The Company’s Supply Function," Springer Texts in Business and Economics, in: Production Economics, edition 2, chapter 9, pages 89-93, Springer.
    • Handle: RePEc:spr:sptchp:978-3-642-30200-8_9
    DOI: 10.1007/978-3-642-30200-8_9
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