Profit Maximization

Profit Maximization

Introduction

The most basic and important purpose of running a business or organization is profit maximization and cost minimization. Thus, managers aim to achieve profit maximization in the short and long run.

Discussion

Economists have divided all the goods or services into four market structures of perfect competition, monopoly, monopolistic competition and oligopoly. These market structures differ in terms of the market power that the companies in each market structure have on the control of pricing policy. In order to maximize profits, every firm has to keep revenue higher then the costs (Mankiw and Taylor, 2006). Revenue is defined as the product ...