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The profit-maximizing output is the one at which this difference reaches its maximum. In the accompanying diagram, the linear total revenue curve represents the case in which the firm is a perfect competitor in the goods market, and thus cannot set its own selling price.
The minimum capacity of an s-t cut is 250 and the sum of the revenue of each project is 450; therefore the maximum profit g is 450 − 250 = 200, by selecting projects p 2 and p 3. The idea here is to 'flow' each project's profits through the 'pipes' of its machines.
Hotelling's lemma is a result in microeconomics that relates the supply of a good to the maximum profit of the producer. It was first shown by Harold Hotelling, and is widely used in the theory of the firm.
For example, in economics the optimal profit to a player is calculated subject to a constrained space of actions, where a Lagrange multiplier is the change in the optimal value of the objective function (profit) due to the relaxation of a given constraint (e.g. through a change in income); in such a context is the marginal cost of the ...
Given that profit is defined as the difference in total revenue and total cost, a firm achieves its maximum profit by operating at the point where the difference between the two is at its greatest. The goal of maximizing profit is also what leads firms to enter markets where economic profit exists, with the main focus being to maximize ...
The agents of capital do not aim simply to reach the average rate of profit, but an above-average rate of profit (the maximum profit, or a "surplus profit"). [69] The rate of surplus value and the turnover time can vary among different producers, and across production periods. [70]
The interval scheduling maximization problem (ISMP) is to find a largest compatible set, i.e., a set of non-overlapping intervals of maximum size. The goal here is to execute as many tasks as possible, that is, to maximize the throughput. It is equivalent to finding a maximum independent set in an interval graph.
The maximum flow problem, in which the goal is to maximize the total amount of flow out of the source terminals and into the sink terminals [1]: 166–206 The minimum-cost flow problem , in which the edges have costs as well as capacities and the goal is to achieve a given amount of flow (or a maximum flow) that has the minimum possible cost ...