Optimal pricing - part 2
Taught by Nick Drape · AI tutor support included
You'll learn how to find the profit-maximising price by understanding two essential concepts: marginal revenue and marginal cost. This video walks you through a practical worked example showing how to calculate both, then demonstrates why profit peaks when marginal cost equals marginal revenue.
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In this lesson
- 0:00 Profit maximisation and marginal concepts
- 0:14 What is marginal revenue explained
- 1:32 Calculating marginal revenue from pricing
- 3:02 Understanding marginal cost basics
- 4:01 Finding profit maximising output level
- 6:09 Marginal cost equals marginal revenue rule
- 8:57 Summary and marginal revenue equation
About this lesson
You'll see exactly how price changes affect demand, revenue, and profit—and discover the precise output level where your business stops benefiting from further price cuts. Essential for Performance Management and Financial Management papers where pricing decisions directly impact exam success.
Duration: 10m
Transcript
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