How do you distinguish between revenues and cost functions of a business?

Question

Question

Answer 1

Answer #1

Revenue function	Cost function
Total income that is earned from selling of priproduc units	Total cost of producing those units
Total revenue= P*Q P = Price (Obtained from inverse demand) Q = Quantity	Total cost = Fixed + Variable costs Fixed cost = constant variable Variable cost = Cost that varies with the output
The more the revenue the more the firm are earning income	The more the revenue the more the cost of production
When we solve Total revenue less Total cost we will know whether the firm is earning profits or not	When we solve for Marginal revenue and Marginal we will know the maximization of output level

Answer 2

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