IB Economics HL 2.11.2 (HL)—Rational producer behaviour Question Bank

• Profit maximization occurs where marginal cost equals marginal revenue

• Profit equals total revenue minus total costs

• Abnormal profit occurs when average revenue exceeds average cost; normal profit when they are equal; losses when average revenue is below average cost

• Calculation [HL]: profit, MC, MR, AC, and AR from data