Question

Write whether the statement is true or false and CORRECT the false statements :

- As the demand of the product increases , the profit always increases.

-In business ,maximising the total revenue , always leads to maximising profit .

- When the demand in a function in price per unit, the demand at optimum profit exceeds the demand that brings total revenue to maximum.

- In the price-demand relationship , P=a-bD, "a" is the demand that will bring the price per unit to zero.

- When the total fixed cost for a product decreases , the optimal demand that maximises the profit increases.

-In the production, administrative salaries are considered as fixed-recurring costs.

Answer 1

1. As the demand for the product increases, the profit increases generally but not always.

2. In business, maximizing the total revenue need not led to maximizing profit. since there can be an increase in price and hence the price of revenue as well as the cost of production may get increased.

3. in price demand relationship D is the demand.

4. the total cost consist of fixed and variable costs. So, if there is a decrease in fixed cost, the profit also gets influenced by the variable cost of the product.