Maximizing Profit and the Average Cost Curve

Being able to predict your company’s profit is a very useful tool. In this video, we introduce the third concept you need to maximize profit — average cost. When looked at in conjunction with the marginal revenue and marginal cost, the average cost curve will show you how to accurately predict how much profit you can make!

The usefulness of these tools does not stop there. Sometimes, you can’t make a profit. You’ll have to take a loss. These tools can also show you how to minimize losses, and make decisions on whether a company should enter or exit an industry.

We also define terms such as zero profits and sunk costs in this video.

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[TheHumbleThinker]

I think I am supposed to be the next non-native English-speaker to praise your magnificent channel!

[white]

You guy's are much better than my teacher by explainijng econimics. I've watched your videos for less than one week and i learned more than in the 14 weeks of my semester. Crazy!
And it makes fun to learn it with you. Not like in the class

[marishaghosh]

I'm gonna take up economics in college and was clearing some basic concepts. This really helped, thanks a lot!

[ashpreetkaur]

I am truely blessed to have come across your YouTube channel. Thank you wholeheartedly for simplifying Economics and making it accessible. 👏👏

[leonaphoria]

thank u for existing on this earth, we love u

[inderjeetsingh]

I have watched this video plus two videos profit maximization in monopoly and perfect competition of your channel. I never understood these concepts before. Your these three videos done wonder for me. 👍👍✌✌🙏🙏👌👌

[CODMASTA]

I really hate economics, but this video was perfect in explanation for a dummy like me. great lecture! thank you!!

[mundheral.askari]

You guys are LEGENDS, Thank you so much !!

[Elmina_]

Thank you so much this was the best explanation I have ever seen. It was quite comprehensible. :)

[andybearvlog]

This is so much better than my Uni material! Thank you.

[sairamkoruprolu]

I found your channel very helpful, thank you so much!

[gregoirelecomte]

This is so clear and well made. Congrats! Very helpful

[aliciaflorrick]

Great video! From where do you source the data to determine whether to enter or exit

[john_mckinney]

Thanks for the explaination. Question: why would a firm exit if the expected price was below AC for an extended time? Wouldn’t it still maximize profits (minimize loss) as long as price was above MC and therefore keep producing?

[grantgibson]

Suppose that the market price for a good is $15 and the MC curve goes through $15 at 2 different Quantities. Ex: The curve starts at $20 and goes down to $12 (passes through 15) and then goes up to $40 (passes through 15). Would I want to produce the quantity that is at $15 when it is going down, or when it goes back up?

[andreasaristeidou]

Good to know that Zero Profits is basically "normal" profits because up until this video it didn't make sense!