Profit maximization Timo Pitter Business Ethics Running a business with regard to Business Ethics automatically brings up the question if the sole purpose of company is maximizing its profits. In this short paper I am going to argue in favor of Profit maximization. First off all, I think if a business puts priorities on maximizing its profits, automatically acts within a social responsibility to a certain level. In other words, higher profits are proportional to an increase of the economic
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• Firm’s objective – maximize profit – attain production efficiency whereby cost is minimized TOTAL PROFIT = TR – TC if TR >TC → Profit (+ve) if TR <TC → Loss (-ve) EQUILIBRIUM OF A FIRM • Equilibrium of a firm implies the desirable level to attain under given condition. • A firm is in equilibrium when it earns maximum profit or minimum losses. • Assumption: – Rational firm – Production of one product – Least cost combination • Two approaches to maximize profit: i. Aggregate Approach (Total Approach)
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Showing Equilibrium Price e = Equilibrium point EquilibriumhasesaeEquilibrium point e Figure 1 Note: From the graph above the equilibrium price is approximately $22.50 c) Economically speaking, the goal of a company is to maximize profit, and maximizing profit is not usually the same thing as maximizing revenue. Therefore, while it may be appealing to think about the relationship between price and revenue, especially since the concept of elasticity makes it easy to do so, it's only a starting
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EGTI Task 1 Marginal Analysis In order for any business to be successful they would need to know how to make the most profit for the goods they are producing and selling. In this paper I am going to explain some of the key terms that companies need to keep in mind when operating their business. First, we will start with marginal revenue, which is defined simply as the extra revenue that is made for each additional unit of a product that is sold. This is directly related to marginal cost, which
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Task 1 A. 1. The profit maximization approach used when total revenue and total cost are compared is the largest positive gap or profit gained between total revenue less total cost. In the table provided the largest profit or profit maximization would be $540. When you produce 8 items profit is at its highest point. To calculate total revenue you take the price times the quantity and to calculate total cost you take the sum of variable and fixed costs. 2. The profit maximization approach used when
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A. The profit maximization approach using total revenue to total cost is determined by using the formula Profit = TR-TC. When total revenue exceeds total cost you will have a profit but when total cost exceeds total revenue you have a loss. In the graph below you can see at 8 units is where the maximum profit would be. After 8 units are produce you see the effect of diminishing returns as your profit for each unit produced gets smaller and smaller until it hits 15 units and you are now taking a loss
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A. Explain profit maximization from the following approaches: 1. Total revenue to total cost 2. Marginal revenue to marginal cost Profit maximization is when the largest amount of profit is made based on output levels and prices. In the total revenue to total cost approach, profit is maximized when the total revenue exceeds total cost by the greatest amount. The profit maximization is going to be found between the two break even points. The break even points are where the total revenue and total
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Business Proposal Jamie Curet ECO 561 December 19, 2011 Dr. Bob Larkin Everyday more people are starting to get rid of physical magazines, newspapers, and now even books. Many people love to read; however, very few have time to sit down and enjoy a good book. Will Bury is an enterprising inventor who truly believes in his newest invention. His mission is to provide people who already like to read the opportunity to read the same books digitally or to listen to them with a realistic synthetic
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which affect product pricing in the UK, there are three which stand out among all others; firm’s objectives, market structure and pricing strategies. Market structure and a firm’s objectives are usually linked, for example a monopolist will normally profit maximise, whilst a perfectly competitive firm will be forced to sell goods at the market price. Despite these general assumptions, the product’s position in its life-cycle and the firm’s choice of strategy also have significant power in affecting
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Final Business Proposal Cynthia Mustani ECO/561 January 12, 2015 Introduction Little Rock, AR is well known for having some of the best barbecue in the south. In fact, Little Rock has won several awards for its amazingly delicious barbecue dishes. The product that I have chosen to develop is a homemade barbecue sauce, CeCe’s Famous BBQ Sauce, which brings a little piece of the south to everyone’s home. Examination of Elasticity of Demand and Market Structure Cece’s Famous BBQ Sauce is
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