Happy Go Lucky Electric Company is the only company providing electric power to the city of Go Lucky. The accompanying graph depicts their marginal costs (MC), average total costs (ATC), demand (D), and marginal revenue (MR). Move point E to the firm's profit maximizing price and quantity. Ø At the profit maximizing point, what is Happy Go Lucky! level of profit? $150 $90 -$30 Price and Costs ($/unit) 10 9 8 7 5 4 3 2 1 0 0 5 10 15 20 25 30 35 MR 40 MC Ⓡ ATC 45 50

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Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?