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Description
In this programme Professor Brooman presents a simple theory of the firm. The main assumption is that the firm is of a set size and will try to maximise profits at the ruling price level. To do th...is he shows that a firm must maximise the excess of total revenue over total cost, and he introduces the concept of marginal cost and marginal revenue to show that the maximum profit position for the firm is to produce the output at which marginal cost = marginal revenue.
In this programme Professor Brooman presents a simple theory of the firm. The main assumption is that the firm is of a set size and will try to maximise profits at the ruling price level. To do th...is he shows that a firm must maximise the excess of total revenue over total cost, and he introduces the concept of marginal cost and marginal revenue to show that the maximum profit position for the firm is to produce the output at which marginal cost = marginal revenue.
| Module code and title: | D100, Understanding society: a foundation course |
|---|---|
| Item code: | D100; 11 |
| First transmission date: | 21-03-1971 |
| Published: | 1971 |
| Rights Statement: | |
| Restrictions on use: | |
| Duration: | 00:14:25 |
| + Show more... | |
| Contributor: | F S Brooman |
| Publisher: | BBC Open University |
| Keyword(s): | Economics; Electricity |
| Footage description: | Prof. Brooman sets the parameters of the unit-production costs and supply in an individual firm wishing to make maximum profit. The amount of plant available is fixed. Brooman examines revenue and costs, and how they are effected by changes in volume of production. Brooman measures these on a per day basis. Production cost table shown. The figures from the table are plotted on a graph having as the axis 1. total cost and 2. output per day. Brooman adds a cost per unit (average cost) column to the table. The average cost from the table is plotted on a graph. Resultant curve shows the general trend. Brooman explains the shape of the two curves (total cost and average cost curves). Concept; of fixed and variable costs of production are introduced and explained with examples of each. Fixed and variable costs explain the shape of the above curves. Brooman introduces the concept of marginal costs. He determines the marginal costs from the total cost column of the table Brooman shows the marginal cost figures on the total cost graph and then on a graph of their own - marginal costs graph. Brooman examines revenue. The marginal revenue for each unit produced is added to the table. It is compared with the marginal cost column. Brooman determines the optimum production number from this comparison. The total revenue column is compared with the total cost column. Again optimum production number is obtained and is the same. Brooman intersects the marginal costs curve with the average costs curve to show at what levels the firm won't want to produce. Brooman briefly discusses some objectives other than profit that motivates firms to produce. He previews the next unit. |
| Master spool number: | 6LT/70162 |
| Production number: | 00520_1211 |
| Videofinder number: | 421 |
| Available to public: | no |
