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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › General query about pricing approach
There are two different points, profit maximization and revenue maximization. These both are calculated in different way.
I am confused that why these point are not same? If a product have maximum revenue so it should have maximum profit at that point which is not found here. These both points are totally different.
For example,
A= 90
B = 0.006
MC= 20
For profit maximisation:
MR=MC so (a-2bq)=20 so q will be 5833 units.
For revenue maximisation
MR=0 so (a-2bq)=0 so q will be 7500 units.
Both units are different. I am not getting the concept.
The two are not the same. It is best seen by looking at the graphs that I draw in my lecture on this. Maximum revenue is at the top of the revenue curve, whereas maximum profit occurs when the extra revenue is equal to the extra cost.