# explain the conditionleading profit maximisation by a producer . use total revenue and total cost approach.

Dear Student,
A profit maximising producer as we know would always like to produce at a point where the difference between Total Revenue and Total Cost is the maximum. This can be shown using the TR-TC approach, with the help of a diagram,

In the figure given above, TR is the Total Revenue Curve, while TC is the Total Cost Curve.  Points ‘K’ and ‘M’ are called break-even points, where TR = TC, i.e. at these points, profits are zero. As can be seen in the figure above, the vertical distance between TR and TC is maximum at output level of OQx. Therefore, OQx ​is the level of output that will be produced by a profit maximising producer. ​Increasing output beyond OQx level will reduce profit. Hence, point ‘E’ is the producer’s equilibrium, where the producer has no incentive to deviate.

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