Profit Maximization

Profit Maximization

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Storyboard Text

  • We have a problem. The numbers show that we're making a negative profit!
  • Oh no! We better inform the king immediately!
  • We have a problem, Your Highness. It seems as though your goat-selling business is making a negative profit. We may have to shut down
  • Oh no! What will I do?!?
  • Once upon a time in a land far, far away there was a castle. In that castle lived a king who, in order to make money, sold goats.
  • How am I supposed to lead an entire kingdom if I can't even run a small business??
  • One day a few of his servants were discussing finances when they discovered that the king wasn't making a profit off his goat-selling. Quickly they ran to inform him.
  • Hmm....
  • That could work...
  • The king, after hearing the news, became angry and distraught. He was sure he would have to shut down his business.
  • Yes we did it!!!
  • Even worse, his subjects would start to question his leadership skills and perhaps challenge him for the throne.
  • We're so sorry sir....
  • Suddenly one of the servants remembered a rule he had once heard that might help to maximize profits. Called the optimal output rule, it says that profit is maximized when marginal revenue of the last unit produced equals its marginal cost.
  • Wait! I just remembered: if we can get marginal revenue to equal marginal cost, we'll maximize profits.
  • By following this simple rule, the king was able to maximize his profits and keep his goat-selling business running.
  • I knew it would work!
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