Optimisation of Production Under Restrictions

Svend Rasmussen ()
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Svend Rasmussen: University of Copenhagen

Chapter 10 in Production Economics, 2013, pp 95-110 from Springer

Abstract: Abstract The general criteria for the adjustment of production when product and factor prices change were described in Chaps. 3, 4, and 5. The general results are derived under the general assumption that the producers wish to maximise profit. The general criterion for profit maximisation is that the addition of input should be continued as long as the increase in total revenue (i.e. marginal revenue) is greater than the increase in costs (i.e. marginal costs). This general criterion includes the following two criteria as special cases: (1) The value of the marginal product for all (variable) inputs must be equal to the price of the corresponding input (VMP i = w i ), and (2)The marginal costs must be equal to the price of output (MC = p y ).

Keywords: Product Price Decrease; Expansion Path; Fodder Quantity; Milk Quota; Fodder Units (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-642-30200-8_10

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DOI: 10.1007/978-3-642-30200-8_10

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