00:01
So here we're talking about profits, right? and it doesn't say profits, but i want to show you why this is a question about profits.
00:09
So it says, q where marginal revenue is equal to marginal cost is what? well, let's make sure we know what these things mean.
00:24
Marginal revenue is referring to the change in revenue over the change in quantity.
00:29
Or if you prefer calculus, the derivative of revenue with respect to quantity.
00:35
And marginal cost, likewise, is the change in cost with respect to quantity, right, at the margin.
00:42
Or the derivative of cost with respect to quantity if you prefer calculus, right? so the key thing is that profits are equal to revenue minus costs, and therefore the change in profits is equal to the change in revenue minus the change in costs.
01:09
You can see how we're getting something very, very similar here, right? going on.
01:14
If i divide all these things by change in quantity, i get that something like this, marginal revenue minus marginal cost...