About This Chapter
Profit & Capital Allocation - Chapter Summary
Make sure you have a strong understanding of profit and capital allocation with the help of this chapter. Whether you are highly familiar with this microeconomics topic or if it is brand-new to you, our lessons can assist learners of all levels who are looking to review profit maximization and capital allocation. You can go through the lessons from start to finish or skip around to specific topics. Since our materials are streaming online all the time, you can access our learning resources day or night. By the time you master this chapter, you will be ready to:
- Define and discuss the formula used for accounting profit
- Describe how to calculate and determine economic profit
- Discuss the equation and theory that explains profit maximization
- Elaborate on how to use financial markets to spread capital through economic systems
1. Accounting Profit: Definition & Formula
In this lesson, you'll learn what accounting profit is and why it's important in the world of finance and business. You'll also examine some of the basic terminologies and the most common financial statements that include accounting profit.
2. How to Calculate Economic Profit: Definition & Formula
Learn what economic profit is and how it's different from standard accounting profit in this lesson. Find out the formula for calculating economic profit and why it's possible to have a positive accounting profit and a negative economic profit.
3. Profit Maximization: Definition, Equation & Theory
What is profit maximization? Why would we want to maximize our profits, rather than revenues or sales? In this lesson we'll discuss what profit maximization is, how to calculate it, and why it's important to understand the concept.
4. Using Financial Markets to Allocate Capital in Economic Systems
Every company wants to make money, but sometimes it takes money to make even more money. Just like many students use student loans instead of saving for years to go to college, firms have a number of ways to raise capital.
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Other chapters within the TECEP Microeconomics: Study Guide & Test Prep course
- Basic Economic Concepts
- Supply & Demand in Microeconomics
- Consumers, Producers & Market Efficiency
- Taxation in Microeconomics
- International Trade in Microeconomics
- Public Sector Economics
- Costs in Economics
- Market Structures
- Labor Market Economics
- Theories & Trends in Microeconomics
- TECEP Microeconomics Flashcards