In this article we will discuss when does the profit of a firm become maximum. Also learn about why is the equality of marginal revenue and marginal cost essential for profit maximisation in all types of markets. The basic objective of a firm under all types of market situation is the profit maximisation. Accordingly, a firm, whether competitive or monopolistic, [...]
Get the answer of: What are the Two Rules of Profit Maximisation? A profit-maximising firm has to face two different but inter-related questions: (a) Should it produce at all? (This is a question relating to shutting down or closing down any operation of the business.) (b) If it is profitable to produce any positive quantity, what is the optimum output? [...]
To discuss the problem of profit maximisation we shall consider here a simple production process where the firm uses two variable inputs X and Y to produce a single output Q and where the firm buys the inputs at fixed prices rx and rY and sells the output also at a fixed price p. The production function of the firm [...]