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:
“For the profit of travel: in the first place, you get rid of a few prejudices.... The prejudiced against color finds several hundred millions of people of all shades of color, and all degrees of intellect, rank, and social worth, generals, judges, priests, and kings, and learns to give up his foolish prejudice.”
—Herman Melville (1819–1891)