Revenue maximisation
Definition. Revenue maximisation is a firm objective of producing the output level that yields the greatest possible total revenue rather than the greatest profit. It occurs at the quantity where marginal revenue equals zero, meaning an extra unit sold adds nothing further to total revenue.
At this point price elasticity of demand equals one, so total revenue is at its peak. A manager paid by sales turnover may pursue this rather than profit maximisation, where marginal revenue equals marginal cost.
This term belongs to The Objectives of Firms in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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