Answer to Question #156605 in Microeconomics for Naza

Question

Define profit maximization and cost minimization problems, also define four

Answer 1

Profit maximization refers to the ability of a business to earn maximum profit at low cost. This state increases earnings per share of a company. Thus, profit maximization is the focal point of financial decisions and investments. It is crucial for the economic existence of a company. Moreover, profit maximization measures a firm's performance standard, apart from portraying its social and economic well-being. A firm ensures economic and social welfare if it utilizes and allocates resources properly while paying for labour and capital. On the other hand, cost minimization implies optimum productivity using the least cost amount of inputs.