<P> Revenue is the amount of money that a company receives from its normal business activities, usually from the sale of goods and services (as opposed to monies from security sales such as equity shares or debt issuances). </P> <P> Marginal cost and marginal revenue, depending on whether the calculus approach is taken or not, are defined as either the change in cost or revenue as each additional unit is produced, or the derivative of cost or revenue with respect to the quantity of output . For instance, taking the first definition, if it costs a firm 400 USD to produce 5 units and 480 USD to produce 6, the marginal cost of the sixth unit is 80 dollars . </P> <P> To obtain the profit maximizing output quantity, we start by recognizing that profit is equal to total revenue (TR) minus total cost (TC). Given a table of costs and revenues at each quantity, we can either compute equations or plot the data directly on a graph . The profit - maximizing output is the one at which this difference reaches its maximum . </P> <P> In the accompanying diagram, the linear total revenue curve represents the case in which the firm is a perfect competitor in the goods market, and thus cannot set its own selling price . The profit - maximizing output level is represented as the one at which total revenue is the height of C and total cost is the height of B; the maximal profit is measured as the length of the segment CB . This output level is also the one at which the total profit curve is at its maximum . </P>

Total revenue minus total cost equals total profit