The Concept of Profit Maximization Profit is defined as total revenue minus total cost. Total cost means the cost of all factors of production.
Cost means opportunity cost, including all implicit and explicit costs.
If only explicit monetary costs are considered, we get accounting profit . But to find economic profit , we need to use opportunity cost. The firm s demand curve tells how much consumers will buy at each price from a particular firm. The shape of the firm s demand curve is related to the degree of competition in the market. Less competition, on the other hand, implies a steeper demand curve.