The rule that guides profit-seeking firms is add additional units of the resource when each successive unit adds more to a firm's total revenue than it adds to its total cost.
A profit is the difference between the revenue generated by an economic entity's outputs and the opportunity costs of its inputs. Entire revenue minus total cost, including both explicit and implicit costs, equals total revenue.
Profit is an excellent motivator of efficiency. Profiteering is also a significant stimulant of value creation in our economy. And, in terms of organizational goals, the drive to maximize profits is fairly simple; the bottom-line focus gives remarkable clarity to corporate operations.
Gross profit, operating profit, and net profit are the three types of profit. The profit margin demonstrates how effectively a company uses revenue. Profit is the driving force behind capitalism and free-market economies.
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