Revenue Maximization. A firm maximizes revenue at MR = 0. Revenue is maximized at MR = 0 because before that point MR > 0 so additional output adds to total revenue. After that point, MR < 0 so additional output decreases total revenue. Super-normal profit is still made, but it is less than under profit maximization.
A firm may want to maximize revenue to raise resources for a big investment. Furthermore, the firm may be trying to increase its market share and monopoly power or drive rivals out of the market. Managers may wish to maximize revenue if their pay is positively linked to revenue. Moreover, managers may revenue maximize for the prestige of maximizing the firm’s assets or stock vale.
