For example, if the business doesn't lack customers, the owner could respond by reducing operating hours and enjoying more leisure. Or, the business owner may seek satisfaction by earning as much profit as possible. This is the alternative we will focus on in class - for a very good reason. If a business faces tough competition, the only way the business can survive is to pay attention to revenues and costs. In economic terms, profit is the difference between a firm's total revenue and its total opportunity cost .
Total revenue is the amount of income earned by selling products.
Total opportunity cost includes both the costs of all inputs into the production process plus the value of the highest-valued alternatives to which owned resources could be put. An Example Suppose you are running a business that produces and sells office furniture. It's a small operation, and in a typical day you produce three custom desks. Suppose you decide to increase production to four desks per day. Overhead expense doesn't change.