There are a variety of microeconomic elements that a firm will review to determine profit potential for a particular industry or product. Those elements may often include marginal revenue, marginal cost, total cost and profit maximization.

A. Explain profit maximization from the following approaches:

1. Total revenue to total cost

Total revenue is the amount of revenue received by a company for the sale of its goods or services. Total cost includes both fixed and variable cost with each level of output. Fixed costs are costs that stay the same with different levels of output, such as rent, insurance and equipment. Variable costs include raw materials, shipping and labor costs that will vary when output levels change.

1. Marginal revenue to marginal cost

Marginal revenue is the...