2) Show that second-order conditions for cost minimization are weaker than second-order conditions for profit maximization.

Expert Solution

The firm's profit maximization problem is solved by the selection of the optimal quantities of employed inputs and output to produce. The two stages involved in the profit maximization problem are minimizing costs of producing any given amount of output, and then finding how to choose the most profit table output level. Thus we can say that the cost minimization is a necessary condition for profit maximization in competitive markets. Thus if at a given level of output, if a firm is not cost minimizing that means that firm is also not maximizing the profits. The conditions for cost minimization are harder and weaker because it generally has the constraint (f(x1; x2) = y) is a non-linear function of x1 and x2 thus certain times it may be difficult to express x2 in terms of x1 from it and plug into the equation of the cost minimization. This the cost minimization concern is being solved for a provided output level which is not necessarily the optimized one that the firm will eventually select

Rahul Sunny answered 2 months ago

Explain each of the best conditions in the issue of corporate profit maximization and cost minimization....

Explain each of the best conditions in the issue of corporate profit maximization and cost minimization. Compare and explain the balance conditions of the fully competitive market and the balance of the Cournot and Bertrand in the oligopoly model.

Compare the cost minimization and the profit maximization approaches to the derivation of the transactions demand...

Compare the cost minimization and the profit maximization approaches to the derivation of the transactions demand for money. What insights do we get for the transactions money demand from using the profit maximization approach that are not apparent from the cost minimization approach?

For each of the 2 cases (profit maximization, loss minimization, and shut down) explain what would...

For each of the 2 cases (profit maximization, loss minimization, and shut down) explain what would happen to economic profit if your federal government imposed a tariff on the importing of several of your key inputs, and why you would expect that result. Lots of detail please!!

3. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribu...

3. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing...

a) What is meant by Cost minimization for a given level of production and Product maximization...

a) What is meant by Cost minimization for a given level of production and Product maximization for a given level of cost? Offer an example. Is cost minimization equivalent or identical the concept of product maximization. True of False. Explain. Please offer examples and the use of graphs where necessary, and state any assumption(s) that you need to arrive at your conclusion.

Why is the goal of wealth maximization is superior than the goal of profit maximization. Also...

Why is the goal of wealth maximization is superior than the goal of profit maximization. Also explain why profit maximization is a short run goal and wealth maximization is long run goal. please explain in detail.

Should cost minimization or opportunity maximization be the primary goal of a cooperative strategy? Can both...

Should cost minimization or opportunity maximization be the primary goal of a cooperative strategy? Can both be achieved simultaneously? Why or why not? original answer please not copy and paste from a previous answer

1. 1. Discuss the conditions for profit maximization for the perfectly competitive firm in the short...

1. 1. Discuss the conditions for profit maximization for the perfectly competitive firm in the short run. In addition to the basic criteria, describe the cost and revenue situations on either side and why, in terms of cost and revenue, the firm will move toward that optimal point. Consider an avocado farmer operating as such a firm. He owns four acres of land on which to plant a single crop. To plant one acre of avocados, he must pay $30...

7. Show analytically that the necessary condition for the profit maximization of a monopolist that supplies...

7. Show analytically that the necessary condition for the profit maximization of a monopolist that supplies his output in two separate markets with two different demand functions is MR1 = MR2 = MC. I please for the clear explanation :)

Discuss the following as they relate to profit maximization. 1) cost curve 2) elasticity 3) pure...

Discuss the following as they relate to profit maximization. 1) cost curve 2) elasticity 3) pure competition 4) monopoly 5)monopolistic competition 6) oligopoly

Question