I was reading a passage on economics, and I found a sentence that doesn't seem to make sense or I am misunderstanding some words. The sentence is blow with the neighboring sentences.

He (manufacturer) balances the sale of his output against the amount he spends in order to produce it. He produces an output such that producing a little more would add as much to his costs as to his receipts. A higher price shifts this margin.

Here, I thought costs refer to the expenses occurred in production, and receipts refer to the receipt papers he got from his supplier. With these meanings, the middle sentence doesn't make sense to me because profit (=sales-cost) increase when the cost is minimized.

Do costs and receipts have the very meanings i mentioned? Or just am i not understanding that economic concepts?

1 Answer 1


Receipts here refers to sales income - the money s/he receives from selling the products.

So the passage is saying that the manufacturer decides on a level of production that will bring him/her an acceptable profit.

Increasing his/her production would raise costs as much as the increased income from sales. That's to say that it would bring the manufacturer no benefit - unless s/he raises prices.

Understanding receipts to mean income from sales and not invoices or similar documents makes this clear.

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