<P> In economics , profit maximization is the short run or long run process by which a firm determines the price and output level that returns the greatest profit . There are several approaches to this problem . The total revenue -- total cost perspective relies on the fact that revenue equals profit minus cost and focuses on maximizing this difference , and the marginal revenue -- marginal cost perspective is based on the fact that total profit reaches its maximum point where marginal revenue equals marginal cost . </P>
<P> In economics , profit maximization is the short run or long run process by which a firm determines the price and output level that returns the greatest profit . There are several approaches to this problem . The total revenue -- total cost perspective relies on the fact that revenue equals profit minus cost and focuses on maximizing this difference , and the marginal revenue -- marginal cost perspective is based on the fact that total profit reaches its maximum point where marginal revenue equals marginal cost . </P>
profit-maximizing firms want to maximize the difference between
profit-maximizing firms want to maximize the difference between
the price and output level
the price and output level