In economics, profit maximization is the short run or long run process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. The total revenue–total cost perspective relies on the fact that profit equals revenue minus cost and focuses on maximizing this difference, and the marginal revenue–marginal cost perspective is based on the fact that total profit reaches its maximum point where marginal revenue equals marginal cost.
Read more about Profit Maximization: Basic Definitions, Total Revenue - Total Cost Perspective, Marginal Revenue-marginal Cost Perspective, Case in Which Maximizing Revenue Is Equivalent, Changes in Total Costs and Profit Maximization, Markup Pricing, Marginal Product of Labor, Marginal Revenue Product of Labor, and Profit Maximization
Famous quotes containing the word profit:
“Go bind thou up young dangling apricots
Which, like unruly children, make their sire
Stoop with oppression of their prodigal weight.
Give some supportance to the bending twigs.
Go thou, and like an executioner
Cut off the heads of too-fast-growing sprays
That look too lofty in our commonwealth.
All must be even in our government.
You thus employed, I will go root away
The noisome weeds which without profit suck
The soil’s fertility from wholesome flowers.”
—William Shakespeare (1564–1616)