The Application of the Profit Function in a Business’s Growth Differential Calculus May 24, 2014

The application of calculus in a business is extremely important since calculus is considered as the study of changes. Its complexity in the study of changes has become one of the humankind’s greatest tool for analyzing changes in the marketplace. The profit function was created with the main purpose for businesses to understand how the changes in revenues and in costs would generate a profit or not profit at all. A profit can be generated when the amount of revenues is higher than the amount of costs. When a business starts, is normal to not gain any profit at all, in fact, most of the time, a business tends to lose money in its first year. However with that information, a business can analyze the money loss of that year and determine any gaps or holes that prevents the maximization of the profit and have a more prosperous result for the following year. For instance, if a company suffer a loss in profit, they can analyze the profit function to determine the main reason of why there was not a positive profit. If they see that the problem of the profit function was a low revenue then they can regulate the sale of products or services and price control, or if the problem lies in the cost function, they can adjust or lower the costs and expenses made by the business. The graph of a profit function can show at what time of the year the company tends to have a higher revenue than a costs or vice-versa. Taking in account this information, a business make changes in order to maximize the profit. It also helps to see where the break-even points are located, so they can assume that beyond the break-even point is when the business will be able to generate the best profits; while below the break-even point will result in loss of money. In conclusion, any business that is aiming to become successful on the long term by getting the best profit possible should take advantage of the profit function. It is a function that will tell the changes in a business’s growth and it will show how much profit the business generates or if it doesn’t generate a profit at all. By analyzing in a more in-depth insight of the profit function, a business can determine if the main reason of why there is not profit comes from the revenues or from the costs. The profit function can also help a business to understand its growth by looking at the graph and knowing where are the break-even points.

Bibliography
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