The profit maximizing point is the level of output where a firm's total revenue exceeds its total cost by the greatest amount. It occurs when marginal revenue equals marginal cost.
Related terms
Marginal Cost: Marginal cost refers to the additional cost incurred from producing one more unit of output. It helps determine how production levels affect overall costs.
Break-even Point: The break-even point is where total revenue equals total cost, resulting in zero economic profit. This means the firm covers all its expenses but doesn't make any extra profit.
Economic Profit: Economic profit is the difference between total revenue and total explicit and implicit costs. If it's positive, it indicates that a firm is earning above-normal profits.