12: Output Profit Maximization
- Page ID
- 58497
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- 12.1: Initial Solution
- With a total cost function, TC(q), and its associated average and marginal cost curves, we are ready to solve the the firm’s output profit maximization problem. The firm chooses the amount of output that maximizes profit, defined as total revenue minus total cost. This is the second of three optimization problems that make up the Theory of the Firm.
- 12.2: Deriving the Supply Curve
- The most important comparative statics analysis of the firm’s output profit maximization problem is based on tracking q* (quantity supplied) as price changes, ceteris paribus. This gives us the firm’s supply curve.