Microeconomics,, 16th Canadian Edition

Dividing Equation 20.1 by Equation 20.2 yields

That is, the ratio of the marginal products, which is –1 times the
MRS, is equal to the ratio of the factor prices, which is –1 times
the slope of the isocost line.
21. Marginal revenue is mathematically the derivative of total
revenue with respect to output,. Incremental revenue is

. However, the term marginal revenue is used loosely to
refer to both concepts.
22. For notes 22 through 24, it is helpful first to define some terms.
Let

where is the profit when units are sold.

If the firm is maximizing its profits by producing units, its

profits must be at least as large as the profits at output zero. That

is,

pK⋅K+pL⋅L=C

[20.3]

 

QQKL = ppKL

dTR/dQ

ΔTR/ΔQ

πn=TRn−TCn

πn Qn

Qn

πn≥π 0

[22.1]