<p>I was wondering if anyone could point me in the direction of a source, like a case study, where profit was maximised for a real (simple) company. I'm learning calculus for economics and a real life example would be very interesting.</p>

CC BY-SA 4.0
2023-01-30T06:33:36.037Z
1/2 Can you explain what exactly you mean by "profit was maximized"? Because of uncertainty, companies (usually) do not buy a winning lottery ticket, put all their money into just the best performing stock; retail companies do not stock their inventories to meet the exact demand, etc. Thus profit is not really maximized (though there are always ex post rationalizations about uncertainty). Can you clarify what exactly you are looking for? E.g.;something like: "what decision making process do companies follow to maximize their profit" or
Giskard
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2023-01-30T06:33:44.657Z
2/2 "what percentage of real-life companies act with the direct goal of maximizing their long-term profits"? I would also caution you that the basic micro model of profit maximization is a "toy model" and is very simplistic; it dies not look at uncertainty about the demand function, the cost structure is unrealistic, there are no corporate governance issues, etc.
Giskard
CC BY-SA 4.0
2023-01-30T07:50:03.040Z
Well I'm looking for a mathematical model used by a company for profit maximisation. So to pick up what you said in 2/2, do you know of a case study or textbook that explain profit maximisation with the uncertainty about the demand function and with a realistic cost structure? It can be of a fairly simple company. I'm essentially looking for something a little more realistic than what can be fined in most textbook. @Giskard
Stany
CC BY-SA 4.0
2023-01-30T09:55:24.730Z
The only microeconomics I have ever encountered that was actually used was estimating  price elasticities of demand (cross- and own-). Arguably even here the only "micro" is knowing the definition of elasticity, the rest is econometrics. Not sure how cost was estimated (I think in a lot of cases exact cost items depend on contracts, which would not be modelled). And in the end, the decision makers were looking at other *key performance indicators*, not profit. (Granted I did not meet the CEO.)
Giskard
CC BY-SA 4.0
2023-01-30T09:58:02.127Z
My experience & opinion is that textbook micro is not well-suited to real-life business operations. But there are many optimists on this site, who will hopefully provide you with some excellent case studies. (Though in my experience their references don't always support their claims, but are rather weakly related and numerous, an academic tradition.)
Giskard
<microeconomics><mathematical-economics><profit-maximization>
Source for maximising profit of a company
Stany
# Source for maximising profit of a company

(Asked by: username_0 on 2023-01-30)

I was wondering if anyone could point me in the direction of a source, like a case study, where profit was maximised for a real (simple) company. I'm learning calculus for economics and a real life example would be very interesting.

**Tags:** microeconomics, mathematical-economics, profit-maximization

> **Comments:**
> **username_1**: 1/2 Can you explain what exactly you mean by "profit was maximized"? Because of uncertainty, companies (usually) do not buy a winning lottery ticket, put all their money into just the best performing stock; retail companies do not stock their inventories to meet the exact demand, etc. Thus profit is not really maximized (though there are always ex post rationalizations about uncertainty). Can you clarify what exactly you are looking for? E.g.;something like: "what decision making process do companies follow to maximize their profit" or  
> **username_1**: 2/2 "what percentage of real-life companies act with the direct goal of maximizing their long-term profits"? I would also caution you that the basic micro model of profit maximization is a "toy model" and is very simplistic; it dies not look at uncertainty about the demand function, the cost structure is unrealistic, there are no corporate governance issues, etc.  
> **username_0**: Well I'm looking for a mathematical model used by a company for profit maximisation. So to pick up what you said in 2/2, do you know of a case study or textbook that explain profit maximisation with the uncertainty about the demand function and with a realistic cost structure? It can be of a fairly simple company. I'm essentially looking for something a little more realistic than what can be fined in most textbook. @username_1  
> **username_1**: The only microeconomics I have ever encountered that was actually used was estimating  price elasticities of demand (cross- and own-). Arguably even here the only "micro" is knowing the definition of elasticity, the rest is econometrics. Not sure how cost was estimated (I think in a lot of cases exact cost items depend on contracts, which would not be modelled). And in the end, the decision makers were looking at other *key performance indicators*, not profit. (Granted I did not meet the CEO.)  
> **username_1**: My experience & opinion is that textbook micro is not well-suited to real-life business operations. But there are many optimists on this site, who will hopefully provide you with some excellent case studies. (Though in my experience their references don't always support their claims, but are rather weakly related and numerous, an academic tradition.)  

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## 0 answers

