Manufacturers engaged in the production or sale of goods require not only profit, but also profit maximization. The profit maximization principle of manufacturers is the principle that the marginal revenue of output 7A64E78988E69D833133433135339 equals the marginal cost. That is MR=MC.

Profit maximization is the ultimate goal of an enterprise, which is influenced by many factors, mainly in two aspects:

1, expanding product income, profit is created by income, without the guarantee of income quantity, profit is out of the question.

2. Strictly control costs and expenses. When the profit increases, the less costs and expenses, the greater the profit.

The profit maximization principle MR=MC can be proved by mathematical deduction:

Let π be profit, Q be the output of the manufacturer, TR be the total income of the manufacturer, and TC be the total cost of the manufacturer, then

π(Q)=TR(Q)？ TC(Q)

The necessary condition for profit maximization is that the first derivative of π to q is zero.

The first derivative of TR to q is the marginal revenue MR, which is also the marginal cost MC. Therefore, when MR=MC, that is, the marginal revenue equals the marginal cost, the profit will be great.

The sufficient condition of profit maximization also requires that the second derivative of π is negative, that is to say, profit maximization requires that the slope of marginal cost function is greater than that of marginal revenue function. Generally speaking, in different market structures, the slope of marginal cost function is positive, while the slope of marginal revenue function is zero in perfect competitive market and negative in imperfect competitive market.