#3-1-profit-maximization #cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
There are three approaches to calculate the point of profit maximization.
Second, maximum profit can also be calculated by comparing revenue and cost for each individual unit of output that is produced and sold. A business increases profit through greater sales as long as per-unit revenue exceeds per-unit cost on the next unit of output sold.
Profit maximization takes place at the point where the last individual output unit breaks even.
Beyond this point, total profit decreases because the per-unit cost is higher than the per-unit revenue from successive output units.