ptofit and loss account 00

May 13th, 2015
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profit and loss statement describe profit maximization

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Ineconomics,profit maximizationis theshort runorlong runprocess by which a firm determines thepriceandoutputlevel that returns the greatestprofit. There are several approaches to this problem. The total revenuetotal cost perspective relies on the fact that profit equals revenue minus cost and focuses on maximizing this difference, and themarginal revenuemarginal costperspective is based on the fact that total profit reaches its maximum point where marginal revenue equals marginal cost.Contents[hide]1Basic definitions2Total revenue - total cost perspective3Marginal revenue-marginal cost perspective4Case in which maximizing revenue is equivalent5Changes in total costs and profit maximization6Markup pricing7Marginal product of labor, marginal revenue product of labor, and profit maximization8See also9Notes10References11External linksBasic definitionsAny costs incurred by afirmmay be classed into two groups:fixed costsandvariable costs. Fixed costs, which occur only in the short run, are incurred by the business at any level of output, including zero output. These may include equipment maintenance, rent, wages of employees whose numbers cannot be increased or decreased in the short run, and general upkeep. Variable costs change with the level of output, increasing as more product is generated. Materials consumed during production often have the largest impact on this category, which also inclu

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