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Topic: Profit maximization


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  Profit Maximization vs. User Loyalty (Alertbox Mar. 2000)
The most important business goal for a website is to maximize user loyalty and the life-time value of the user's future visits and purchases.
It is less important to maximize the value of the current visit, and indeed it is often counter-productive to do so.
With this information, profits can be maximized by multiplying the profit margins and their corresponding conversion rates and picking the price that comes out best.
www.useit.com /alertbox/20000305.html   (751 words)

  
 Profit Maximization
Maximizing Profit - A firm produces a product in a competitive industry and has a total cost function C = 50 + 4q + 2q(squared) and a marginal cost function MC = 4 + 4q.
Profit maximizing price and output - Assume a Monopoly market type and further assume cost function = C (q) = 2Q and Demand function of P (q) = 10 — 24Q determine profit maximizing price and output.
Profit Maximization - Use the following data for a perfectly competitive firm and the profit maximizing input combination rule to identify how many workers the firm will employ to maximize profits.
www.brainmass.com /homework-help/economics/microeconomics/96767   (875 words)

  
 Profit Maximization
In many industries, profit maximization is not simply a potential goal; it's the only feasible goal, given the desire of other businesspeople to drive their competitors out of business.
In economic terms, profit is the difference between a firm's total revenue and its total opportunity cost.
TR rises to $2500, TC rises to $2080, and profit increases to $420.
www.econ.ilstu.edu /ntskaggs/ECO105/readings/profit-max.htm   (1108 words)

  
 Profit Maximization
Another way to see whether the firm is maximizing profits is to assume that our P = MC rule isn't true.
While zero accounting profit would be undesirable, zero economic profit is not.
A person could work all day to make $1 in accounting profits and be very unhappy since that person could probably do better in some other money-making activity (i.e.
www.louisville.edu /~bmhawo01/econpage/201/handouts/profit/profit.html   (955 words)

  
  Profit Maximization
For producers, the economic problem is to maximize profits.
We look at profit, which is revenue minus cost, to try to find a maximum.
The maximum profit is at 14 hours of work, mowing 13 lawns, with revenue of $234, cost of $154, and profit of $80.
www.arnoldkling.com /econ/markets/producer.html   (1335 words)

  
  Profit maximization
In economics, profit maximization is the process by which a firm determines the price and output level that returns the greatest profit.
The total revenue -- total cost method relies on the fact that profit equals revenue minus cost, and the marginal revenue -- marginal cost method is based on the fact that total profit in a perfect market reaches its maximum point where marginal revenue equals marginal cost.
Since total profit increases when marginal profit is positive and total profit decreases when marginal profit is negative, it must reach a maximum where marginal profit is zero - or where marginal cost equals marginal revenue.
www.guajara.com /wiki/en/wikipedia/p/pr/profit_maximization.html   (949 words)

  
 Profit Maximization 5   (Site not responding. Last check: )
So it is profitable to increase the labor input from 200, or, by the same reasoning, from any labor input less than $500.
This difference between the VMP and the wage is the increase or decrease in profits from adding or subtracting one unit of labor.
It is sometimes called the marginal profit and (as we observed in studying consumers' marginal benefits) the absolute value of the marginal profits is a measure of unrealized potential profits.
william-king.www.drexel.edu /top/prin/txt/MPCH/firm16a.html   (279 words)

  
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modelingphp.sitesled.com /osteokay/micrografx.html   (2154 words)

  
 CHAPTER A2. THE GOALS OF THE FIRM
So, it does not matter whether it is profit or some other behavioral objective, or whether the decision maker is attempting to maximize, satisfice, or only mediate, the relevant consideration is whether a model erected upon a profit maximization assumption can explain or predict well enough.
Five prominent managerial behavior premises are that managers attempt (a) to maximize profits; (b) to optimize profits subject to various constraints; (c) to optimize some growth phenomenon subject to a profit requirement as a constraint; (d) to satisfice with respect to profit; and (e) to mediate among competing constituencies.
Explain why William Baumol concludes that the profit maximization premise is satisfactory for a theory of the behavior of the typical large corporation.
facweb.furman.edu /~dstanford/mecon/a2.htm   (4960 words)

  
 Markets & Startegy Page 3
At the center of the traditional economic view of the firm is the profit maximization assumption.
The same price and cost data can be examined to evaluate the level of output for profit maximization by calculating the rates at which revenues and costs change as output is increased.
Because there is assumed in the profit maximization model that the decisions regarding level of production and combinations of resources are made without conflict and are non-political, implicitly, the owners either must be single individuals or, at least.
www.mgmtguru.com /mgt499/TN1_3.htm   (703 words)

  
 The concept of profit in accounting and economics - Management Portal - Publications   (Site not responding. Last check: )
However, for one and the same activity, profit does not necessarily have to be the same number under different points of view.
In economics, profit is maximized by increasing the volume of production and sales up to that point in which marginal costs of one additional unit produced and sold are equal to the marginal revenue generated with this additional unit.
Profits can be distributed to the owners, or they can be left in the organization to finance further investments.
www.themanager.org /Models/profit.htm   (860 words)

  
 Profit
Profit does exist in the real world, and there are several explanations that economists have for it.
Others see profit as an indication that forces of competition may not be strong and that in some industries barriers to entry exist.
The assumption that firms attempt to maximize profits is inconsistent with the underlying methodology of microeconomics, which assumes that all decision-makers are individuals.
www.ingrimayne.com /econ/MakeProfit/Profit.html   (1419 words)

  
 Pricing and Profit
Economists use the paradigm of profit maximization to explain the behavior of the firm.
Positive profit means the investment is returning more than the fair rate of return, while negative profit means that the return on the investment is less than the fair rate.
A definition of profit such as this one implies a big difference between insolvency, when the outflow of dollars to pay bills exceeds the inflow of revenue, and economic losses, when economic profit is negative.
www.ses.wsu.edu /people/faculty/rosenman/dist301/price2.htm   (1899 words)

  
 Objective of Firms in Market Economy: Profit Maximization?
The answer to this question is that while profit maximization expresses the general nature of the objective of firms it is not profit per se that firms should try to maximize.
Even in the case of the steady state operation of the firm it is not profit per se which is the proper objective of the firm.
A firm's objective is therefore the maximization of the expected present value of cash flow net of the investment outlays that must be made to generate those cash flows.
www.applet-magic.com /profitmax.htm   (584 words)

  
 Eco 301 chapter 8
Profit is maximized when the amount between total revenue and total cost is the greatest.
This economic profit occurs because the price where this firm maximizes profit is high enough to recover all of the costs associated with producing 8 units of output.
Notice in 8.4 profit is maximized at point A and q* output but this time the price is not high enough to recover all of the fixed costs.
www.oswego.edu /~spizman/eco301ch8.html   (3381 words)

  
 Maximization Debates
The Oxford results were accompanied by a paper from Harrod (1939) which argued that perhaps profit- maximization was not observed in many firms partly because the necessary information - marginal revenue and costs - for such calculations was hard to obtain.
Alchian (1953) responds quite clearly that Penrose confused intended profits and realized profits: the selection procedure is simply on the basis of realized profits that permit a firm to continue operating; it is not necesary that they actually search for them.
Alchian's argument that profit-maximization behavior on the part of entrepreneurs is irrelevant for the result that industry will attain the profit-maximizing solution was taken by Milton Friedman to a ridiculous extreme in his 1953 paper on "positivist" methodology.
cepa.newschool.edu /het/essays/product/Maxim.htm   (1932 words)

  
 Reading for Profit Maximization - -Sections 9 and 14   (Site not responding. Last check: )
To maximize profit, a firm attempts to produce the quantity of output that maximizes the difference between total revenue and total cost.
The marginal cost of the first bagel is $1.00, which is less than the marginal cost, but profit is negative.
Profit is therefore maximized at the point where MR = MC (or the last quantity where MR > MC).
www.ilstu.edu /~cemushr/ECO105/profit.html   (396 words)

  
 E111RChap9solutions-Marginal Analysis and Profit Maximization
The marginal profit of the 3rd unit of quantity is the additional profit earned by producing the 3rd unit; that is, it is the difference in total profit between producing 2 units of quantity and producing 3 units.
From the total profits column in the table above, we notice that total profits of 3 units of quantity is $28 and total profits of 2 units of quantity is $18.
From the total profits column in the table above, we notice that total profits of 3 units of quantity is $9 and total profits of 2 units of quantity is $5.
employees.oneonta.edu /beckei/E111RChap9solutions.html   (3404 words)

  
 On Admission Control for Profit Maximization of Networked Service Providers
Since even the requests belonging to the same class may be diverse in terms of their service time, it is necessary to choose between requests of the same class as well for maximizing the profit of the provider.
We present a provably optimal offline algorithm for a special case of profit maximization problem in Section 3.1 and then extend it for the general case.
This ensures that we maximize the total number of requests serviced in an expected sense, i.e., if the assumed distribution is an exact set of requests, we should be maximizing the number of requests serviced.
www2003.org /cdrom/papers/refereed/p237/p237-verma.html   (7270 words)

  
 Applying Amoeba to Increase Profit
In particularly, it fails to consider that the profit obtained at the best vertex in its simplex may change over time -- it (falsely) believes that the best vertex is an ever-sharper needle sitting in a ever-deepening trough in the profit landscape.
In steady state, the average profit (computed between iterations 50 and 200 to avoid transient effects) is 0.31683, or 0.766 of the ideal profit.
9c, which shows the profit landscape at iteration 200, indicates that the algorithm can be be successful for long periods of time.
www.research.ibm.com /infoecon/paps/html/amec99_bundle/node9.html   (1029 words)

  
 Economics Interactive Tutorial: Marginal Cost and the Optimal Output Rate
Sure enough, profit is greatest when you serve 7 patients.
This is less profit than before, but it's the most Joan's can make at the current price.
If we assume that there is no profit masquerading as cost, then the incentive to enter this industry is gone.
hadm.sph.sc.edu /COURSES/ECON/MCost/MCost.html   (1852 words)

  
 Monopoly Profit Maximization   (Site not responding. Last check: )
MR=MC That is, the rule says that the monopoly should increase output up to the level where the marginal cost curve intersects the marginal revenue curve, in order to maximize its profits.
Profit maximizing output is the output at which they intersect, shown by the gold line.
The output that corresponds to maximum profits is Q', which is 10,500 widgets, and the monopoly price is $70 per widget.
william-king.www.drexel.edu /top/Prin/txt/Monch/mon18.html   (141 words)

  
 E111RChap9-Marginal Analysis and Profit Maximization
The marginal profit of the 3rd unit of quantity is:
A firm which is producing 100 units of quantity discovers that at this quantity it is earning a positive total profit.
Alternatively, produce the quantity at which marginal profit = 0; that is, increase quantity as long as marginal profit >0.
employees.oneonta.edu /beckei/E111RChap9.html   (1729 words)

  
 Boyes/Melvin Economics: Fundamental Questions
When economic profit is zero, economists say that the firm is getting a normal accounting profit.
Negative economic profit means that total revenue is less than all opportunity costs.
At that point, economic profits are at their maximum value, and Joe gets as much money as possible from his business.
college.hmco.com /economics/boyes_melvin/fund/student/fq05.html   (795 words)

  
 Lecture 20 Notes
Profits are equal to the firm's total revenue minus its total costs.
This is called a normal profit and simply means that the firm earned as much in this line of business as it could have earned in some other line of business.
A firm can earn a positive accounting profit but negative economic profits if it could have earned a greater return in some other line of business.
www.personal.psu.edu /faculty/d/x/dxl31/econ14/Spring_2000/lecture20.html   (490 words)

  
 AND ITS APPLICATION
Much of what is defined as corporate profits under the tax laws is a normal return to shareholders for the equity they have invested in the corporation.
In order to maximize profits, a firm should produce that output level for which the marginal revenue from selling one more unit of output is exactly equal to the marginal cost of producing that unit of output.
Revenue maximization is a goal for firms in which they work to maximize their total revenue rather than profits.
www.k-state.edu /economics/ramesh/E520CHP7.HTM   (3652 words)

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