Why is the total profit curve shaped like a hill?
If a firm produces nothing, it certainly earns no profit. At the other extreme, a firm can produce so much output that it swamps the market, forcing price down so low that it loses money. Only at intermediate levels of output can the company earn a positive profit. Consequently, the total profit curve will rise from zero levels at a very small output to positive levels at intermediate outputs; finally, it will fall to negative levels when output gets too large.
You might also like to view...
The primary purpose of antitrust legislation is to:
a. protect small business. b. protect the competitiveness of U.S. business. c. protect the prices of American-made products. d. ensure American labor is paid a fair wage. e. ensure firms earn only a fair profit.
Briefly explain how command-and-control regulation works