Top 20 travel destinations in the us on One of the most surprising and frequently cited implications of marginal analysis is that the price and production quantity that maximize a firm’s profit will be unaffected by changes in certain types of costs. Specifically, fixed costs (costs that are independent of the amount of output produced) will have no impact on a firm’s optimal price and production quantity. For example, if the amount of property TAX a firm pays each year rises, a profit-maximizing firm will not adjust the price at which it sells its output or the amount it produces. This follows immediately from the equimarginal principle. At the profit-maximizing production level, the marginal cost of production will just equal the extra revenue that selling another unit of output would provide. While an increase in property taxes would affect the total cost of production, it would not affect the marginal cost. Since the property taxes would have to be paid regardless of the amount the firm produces, the extra cost of producing another unit of output is independent of the size of the tax. Top 20 travel destinations in the us 2016.
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