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Profit maximization using Total revenue and Total cost approach?
Wiki User
∙ 12y ago
level of output to look at the total revenue and total cost curve directly
Wiki User
∙ 12y ago
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Policies on profit maximization?
Profit maximization is a short run or long run process which a firm determines the price and output level that returns the greatest profit. The total revenue-total cost perspective is based on the fact that profit equals revenue minus cost and focuses on maximizing this difference.
Discuss the profit maximization model?
hard to discuss. To really explain it I'd need a graph which I don't have. But Profit maximization is the ATC (Average total cost) and MR (Marginal Revenue) equal each other
The difference between total revenue and total cost?
profit or loss
When is maximizing revenue the same as maximizing profit?
It is same when your revenue increases and at the same time it manages to maintain its profit %. Assuming a company has a turnover of 100 crores and has a running expenditure of 75 crores then profit is 25 crores which is 25%. If the company takes steps to increase its turnover and manages to increase the total turnover the next year to 200 crores and manages to keep its expenditure to 150 crores, this implies that the profit this time around was the same 25% and hence profit maximization happened the same as revenue maximization. But it is seldom the case. In many cases when a company strives to increase either, the other takes a hit.
How does a firm calculate its profit?
total revenue minus total cost
Policies on profit maximization?
Profit maximization is a short run or long run process which a firm determines the price and output level that returns the greatest profit. The total revenue-total cost perspective is based on the fact that profit equals revenue minus cost and focuses on maximizing this difference.
Discuss the profit maximization model?
hard to discuss. To really explain it I'd need a graph which I don't have. But Profit maximization is the ATC (Average total cost) and MR (Marginal Revenue) equal each other
Sales maximization vs profit maximization?
sales maximization technique is generally used in scale industries where base of the expenses is largelly fixed and where variable costs are limited. on the other hand profit maximization technique are used by variety of industries. total output is higher in sales maximization as compared to profit maximization
What is profit maximizatoin?
Profit is the net total amount that comes from all revenue a firm takes in minus all costs it pays out. The goal in any business (other than non-profits) is to maximize this profit. In profit maximization, you want to take all your factors (each cost and each revenue) and figure out a way to make the profit made is greatest.
What are the basic objectives of financial management?
The objective of financial management is wealth maximization rather than profit maximization. Wealth maximization means the total value of the firm.
How do i calculate percent profit?
The answer will depend on profits as a percentage of what! As a percentage of revenue, it would be 100*(Total Revenue - Total Costs)/Total Revenue In example (as given in discussion page) Total Revenue = 236,000 Total Costs = 173,000 Total Profit = Total Revenue - Total Costs = 63,000 So percentage profit = 100*63,000/236,000 = 26.7% (approx).
The difference between total revenue and total cost?
profit or loss
When is maximizing revenue the same as maximizing profit?
It is same when your revenue increases and at the same time it manages to maintain its profit %. Assuming a company has a turnover of 100 crores and has a running expenditure of 75 crores then profit is 25 crores which is 25%. If the company takes steps to increase its turnover and manages to increase the total turnover the next year to 200 crores and manages to keep its expenditure to 150 crores, this implies that the profit this time around was the same 25% and hence profit maximization happened the same as revenue maximization. But it is seldom the case. In many cases when a company strives to increase either, the other takes a hit.
What is the formula for finding a firm's profit?
Total Profit = Total Revenue minus Total Costs.
How do you calculate total revenue?
To calculate total revenue you simply multiply the quantity by the price. Total revenue includes expenses; therefore, total revenue isn't the same as profit.
What is the formula to calculate profit?
A simple profit formula reconciles revenue to losses and expenses. Profit equals the total revenue subtracted by losses and expenses.
What are the differences between maximization and optimization?
Profit maximization refers to the process of determining the price and the total output level that can ensure a firm the maximum profit. There are many strategies and ways by which this issue can be approached. According to some people, profit equals the difference between the total revenue and the total cost. This is better known as total revenue-total cost method. Another method called the marginal revenue-marginal cost stresses on the fact that profit in a competitive and non-monopolized market reaches the maximum point where the marginal revenue is equal to the marginal cost. The cost incurred by a firm are of two types namely fixed cost and variable cost. Fixed cost refers to those cost that have to be incurred by the firms even during the times of no output. The examples of fixed costs are wages, rent, upkeep charges, maintenance charges etc. Variable cost refers to those cost which increase as more and more output is produced. The summation of these two costs gives the total cost. Marginal cost is the change in cost as more and more output is produced -- in economical terms, it is the derivative of cost with respect to the output quantity. The marginal cost may vary accordingly if the calculus approach is taken. Profit optimization refers to the processes that look to cut down unnecessary costs in the production. It is much different from profit maximization. Here, if a firm is already running in profit, it can look to optimize the profit even more so as to consolidate its own market in the globalized world. The profit is optimized by means like cutting down on the wages, cost of finished product from small manufacturers. Cost-cutting can be, in a way related to profit optimization.
