I have financial statements for a small business. How does one generate a profit function based on those financial statements?© BrainMass Inc. brainmass.com October 10, 2019, 3:20 am ad1c9bdddf
The profit function maximizes profit as a function of p, w, and r (where p is the price per unit, w is the wage, r is the price of capital). A profit function is generally depicted as profit = py - wl -rk (y is the number of units produced).
However, in practical terms, a profit function gives us the firm's profits as a function of units sold. We then write it as
P(q) = R(q) - C (q). The profit function is then defined in terms of the revenue and cost functions.
The revenue function gives us revenue as ...
Generationg profit functions from financial statements are examined.