ajaz_eco_204_2012_2013_chapter_14_PMP_Algebra

Case d occurs when neither cases b or c occur in this

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Unformatted text preview: and Unconstrained solution Case D If/when is ⏟? If/when is This says the company should produce an output between the minimum output and capacity. Case D occurs when neither cases B or C occur. In this case, the optimal output is found by substituting in the FOC: 8 ECO 204 Chapter 14: The Mathematics of the Profit Maximization Problem (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. ⏟ ⏟ ⏟ ⏟ This is the “ECO 100” rule for profit maximization and it happens when the unconstrained solution is between the minimum output and capacity (see example below); or when the unconstrained solution is equal to the minimum output and less than capacity; or when the unconstrained solution is greater than the minimum output and equal to capacity (respectively shown in the following three graphs): Demand Unconstrained solution Demand Unconstrained solution 9 ECO 204 Chapter 14: The Mathematics of the Profit Maximization Problem (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. Unconstrained solution Demand In summary: Case B Case C (⏟) When When Case D ⏟ When neither cases B or C occur ⏟ found by (⏟) (⏟) FOC FOC FOC ⏟ (⏟) (⏟) ⏟ 10 ECO 204 Chapter 14: The Mathematics of the Profit Maximization Problem (this version 2012-2013)...
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This document was uploaded on 01/19/2014.

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