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Discuss the conditions for profit Maximization.

Discuss the conditions for profit Maximization.

Answers

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



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.



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.

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

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