Please help me write what are the interesting statement in this section and why

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Please help me write what are the interesting statement in this section and why is it important to know at economics 4-6 sentences Thanks!

10.4 WHAT IS THE PROFIT-MAXIMIZING RULE? A firm maximizes profits by producing and selling up to the point where marginal revenue equals marginal cost. To understand this idea, let's start with a review of some basic principles from earlier chapters using simple numbers found in a table. (See Exhibit 10-A.) Check the firm's demand schedule and see that price declines while quantity increases. For example, price declines from $7 to $6.50, while quantity increases from 100 to 200. The total revenue at quantity 100 is $700 ($7 times 100), and the total revenue at quantity 200 is $1,300 ($6.50 times 200). See the marginal revenue numbers, and recall that marginal revenue is the change in total revenue divided by the change in quantity. So, marginal revenue for each unit between the quantity of 100 and 200 is estimated to be $6 ($1,300 minus $700 divided by 200 minus 100). Marginal revenue is less than price because price had to be reduced from $7 to $6.50 (a $50 reduction in revenue) to gain an additional 100 units of quantity demanded (a $650 gain in revenue). Notice the entire set of numbers marginal revenue falls at a steeper pace than price in association with the quantity demanded. Although marginal revenue is observed to decline with quantity, marginal cost instead rises in the short-run. For example, marginal cost is $1 for an additional unit of output between the quantities of 100 and 200, but rises to $3.50 per unit when production rises from 800 to 900 Marginal cost is calculated in the table as the difference in total cost divided by the change in quantity. When marginal cost is $1, total cost increases by $100 (from $850 to $950) while quantity expands by 100 (from 100 to 200) over the interval Marginal cost declines for the next interval (due to increasing returns, but eventually rises at succeeding intervals because total cost is rising greater and greater. Of course, rising marginal cost is attributed to diminishing returns to the variable inputs in the short run The firm could produce just 100 units of total output, but it will earn a greater profit if it expands production and sales. Considering the marginal figures over the interval from 100 to 200 the marginal cost is only $1 but the

Explanation / Answer

THE SECTION IS PROVIDING US WITH AN INSIGHT INTO HOW OUTPUT AND PRICES ARE RELATED WITH COSTS. FOR MAXIMIZING PROFITS WE SHOULD BE ABLE TO KNOW THE RELATIONSHIP BETWEEN COST AND PRICE. THE DECIDING FACTOR OVER HERE IS MARGINAL INCREASE AND DECREASE.

PROFIT IS MAXIMIZED AT THE POINT WHERE MARGINAL COST IS EQUAL TO MARGINAL REVENUE. MARGINAL REVENUE FALLS AT A FASTER SPEED THEN THE PRICE. MARGINAL COST DECLINES BUT EVENTUALLY STARTS TO RISE. MARGINAL COST IS INCREASING DUE TO THE DIMINISHING RETURNS TO VARIABLE INPUTS. UNTIL MARGINAL REVENUE IS GREATER THEN MARGINAL COST THE TOTAL PROFITABILITY RISES. AT THE MARGIN THE PROFIT IS NEGATIVE. FOR THE SAKE OF PROFITS, BUSINESS FIRMS AVOID SUCH CIRCUMSTANCES.

IT IS NECESSARY TO KNOW ABOUT ECONOMICS BECAUSE IT IS THE MOST IMPORTANT ASPECT OF ANY BUSINESS ACTIVITY. ALL THE BUSINESSES HAVE TO DEAL WITH COST AND PRICES, TO GAIN ITS MOST IMPORTANT GOAL OF EARNING MAXIMUM PROFITS. PROFITS ARE LINKED TO COST AND PRICES, THE RELATIONSHIP BETWEEN THEM IS THE PART OF STUDY OF ECONOMICS. ALSO THE BEHAVIOR OF FACTORS OF PRODUCTION AND MARKETS IS DONE UNDER ECONOMICS. HENCE ECONOMICS IS VERY IMPORTANT FROM BUSINESS POINT OF VIEW.

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