What is the formula for maximizing profits?

The formula for maximizing profits is represented by the difference between total revenue and total costs of production. This approach focuses on understanding that profit is effectively what remains after all expenses associated with production and sale have been deducted from the revenue generated by selling goods or services.

In this context, total revenue is the total amount of money received from sales, while total costs include both fixed and variable costs associated with that production. By subtracting total costs from total revenue, businesses can determine their profit, thus enabling them to assess profitability and make informed decisions to enhance efficiency, control costs, or adjust pricing strategies.

The other options lack the comprehensive relationship needed to accurately define profit maximization. For example, focusing solely on fixed costs or sales figures without including variable costs or total revenues does not provide a complete financial picture necessary for effective decision-making.