Discuss the conditions for profit Maximization.

      

Discuss the conditions for profit Maximization.

  

Answers


Martin
(i) the first-order (or necessary) condition (FOC), Marginal Revenue(MR)=0

soc.png

SCO Requires that the first-order condition must be satisfied under the condition of decreasing marginal revenue (MR) and increasing marginal cost (MC).
Fulfilment of these two conditions makes the second-order condition the sufficient condition for profit maximizations.

mc.png

SOC is satisfied only at point P2, where technically, the second derivative of the profit function is negative. By implication, at this point, the total profit curve has turned downward after having reached its peak.



marto answered the question on April 17, 2019 at 05:26


Next: What are the advantages and disadvantages of cost estimation?
Previous: Based on performance, you have been provided with the following information regarding ABC Ltd for the year ended 31 December 2004 :

View More Production Economics Questions and Answers | Return to Questions Index


Exams With Marking Schemes

Related Questions