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List the limitations of Total Revenue - Total Cost Approach

      

List the limitations of Total Revenue - Total Cost Approach.

  

Answers


Martin
a) It is difficult to see at a glance the maximum vertical distance between the total revenue and total cost curves as several tangents may have to be drawn before one reaches the appropriate one corresponding to the maximum profit point.

b) This approach does not assist to discover price per unit at various outputs at first sight. Total revenue has to be divided by total number of units produced in order to get the price per unit. For example, at the equilibrium output OM, the price can be found by dividing MP by OM.
marto answered the question on April 16, 2019 at 13:20


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