This document discusses profit maximization for businesses. It defines profit as revenue minus costs. A business maximizes profit by producing at the quantity where marginal revenue equals marginal cost. This is achieved through analyzing total revenue and total cost curves as well as marginal revenue and marginal cost curves. The marginal revenue and marginal cost method is described as the process companies use to determine the optimal output and price levels to maximize their return.

1. Submitted by :-
Saurabh Bhambhani
15-AEM-10|GI-9230
Aligarh Muslim University

2. is the making of gain in
Business activity for the benefit of the
owners of the business.

3. The cost of all factors of production.
The total amount of money that the firm
receives from sales of its product or other
sources.

4.  Profit is the surplus of revenue over and above
all paid-out costs, including both manufacturing
and overhead expenses.
 It is the difference between a Company’s total
revenue and its opportunity cost.

8. A monopolist maximizes profit by choosing a
quantity where marginal revenue equals marginal
cost
A process that companies undergo to determine the
best output and price levels in order to maximize its return.
 Total Revenue Total cost Method
 Marginal Revenue Marginal Cost
Method

9.  PROFIT = TR-TC
 Total Revenue (TR): This is the total income a firm
receives.
 Total cost: refers to the total expense incurred in
reaching a particular level of output; if such total cost
is divided by the quantity produced, average or unit
cost is obtained.
 MARGINAL REVENUE : THE CHANGE IN
REVENUE WHICH COMES FROM SELLING AN
ADDITIONAL UNIT OF OUTPUT.
 MARGINAL COST : THE CHANGE IN COST
WHICH COMES FROM PRODUCING AN

10. •AC AND AR ARE THE AVERAGE
COST AND REVENUE COST
CURVES.
•MC IS THE MARGINAL COST AND
MARGINAL REVENUE.
•WHEN OUTPUT REACHES
OM,MARGINAL REVENUE EQUALS
MARGINAL COST AT E.
•HENCE PQRS IS THE PROFIT.
•BEYOND OM OUTPUT ,THE MC
CURVE IS HIGHER THAN MR CURVE
WHICH INDICATES LOSSES.
•THUS PROFITS ARE MAXIMUM
WHEN MR=MC.

11.  Haziness of the concept “Profit”
 IgnoresTimeValue of Money
 Ignores the Risk
 Ignores Quality

12. Thank You