How to Maximize Profits
Economist Lester Thurow writes about profit for The
Concise Encyclopedia of Economics:
www.econlib.org/LIBRARY/Enc/Profits.html
One of the reasons that firms might not actually maximize
profit is something called the principal-agent problem,
which is explained in this piece from a publication from
India:
www.blonnet.com/iw/2003/12/14/stories/2003121400061100.htm
An article on enotes.com explains circular flow, though
it does not have a picture, which might be helpful:
business.enotes.com/business-finance-encyclopedia/circular-flow
Amosweb explains how the demand curve is the source of
the marginal-revenue curve:
www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=marginal+revenue
Thomas McGahagan of the University of Pittsburgh explains
the production function:
www.pitt.edu/~mgahagan/Prodfn.htm
(I have not yet found an appropriate entry for this
topic.)
Arnold Kling explains profit maximization in his class
notes:
arnoldkling.com/econ/markets/producer.html
Appendix
Here is an entry from what may be the best economics blog
there is. It raises more questions than it answers.
www.marginalrevolution.com/marginalrevolution/2007/03/does_marginal_c.html
Sweatshops are terrible, but should they be abolished?
Economists say that you need to consider the alternatives
before you answer that question. Opportunity costs should
not be ignored.
www.slate.com/id/1918/
www.econlib.org/library/Columns/y2008/Powellsweatshops.html
Textbooks traditionally show how firms maximize profits
using a variety of cost and revenue curves. About.com has a
good example of this approach in the form of a problem you
can work:
economics.about.com/od/coststructure/ss/revenue_costs.htm
These links were checked on July 5, 2008.
 
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Copyright
Robert Schenk
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