Question

Compare the producer’s equilibrium condition given by ‘maximisation of output for a
given cost’ with that given by ‘minimisation of cost for a given level of output’. Do both
these conditions result in same outcome?

Answer 1

Answer:

Profit maximization implies cost minimization; however, cost minimization doesn't necessarily mean profit maximization. Profit maximization is a combination of both revenue maximization and cost minimization because profits(denoted by pi) are equal to the difference between revenues and costs.

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