Economists generally assume that firms attempt to maximize

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Economists generally assume that firms attempt to maximize their total economic profits, which is calculated as total revenue minus total cost. This is because economic profits reflect the amount of money that the firm can reinvest in the business or distribute to shareholders, which is the ultimate goal of most firms. While firms may also try to maximize total revenue or sales, these objectives are not as directly linked to profitability as economic profits. Marginal revenue, on the other hand, is a useful concept for analyzing pricing decisions, but it is not a direct measure of firm performance or profitability.

Economists Generally Assume That Firms Attempt to Maximize