Profit Maximization Formula
The profit maximization formula is expressed mathematically as:
MC = MR
Where,
MC (Marginal Cost) represents the additional cost incurred by producing one additional unit of output. It is calculated as the change in total cost divided by the change in quantity of output (MC=ΔTC/ΔQ).
MR (Marginal Revenue) represents the additional revenue gained by selling one additional unit of output. It is calculated as the change in total revenue divided by the change in quantity of output (MR=ΔTR/ΔQ).