What is the primary goal of profit maximization for an enterprise?

• A. Increasing market share
• B. Making the gap between total revenue and total cost as wide as possible
• C. Enhancing customer satisfaction
• D. Improving employee welfare

Answer: (B)

The primary goal of profit maximization for an enterprise is to make the gap between total revenue and total cost as wide as possible. This concept is fundamental to business operation; profit is generated when total revenue, which is the income received from the sale of goods or services, exceeds total costs, which include all expenses incurred in running the business. The wider this gap, the higher the profit, indicating the enterprise is effectively managing its costs while maximizing its sales.

Profit maximization serves as a key performance indicator for businesses, as it directly impacts financial health and sustainability. By focusing on this gap, enterprises can make informed decisions about pricing strategies, cost control, and operational efficiency, all aimed at increasing profitability.