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What is Short-Run and Long-Run Profit Maximization about?

1. In the long run, firms can vary all input levels to maximize profits. The firm chooses input combinations that locate it on the highest possible iso-profit line, given its production function constraint. 2. Increasing the quantity of one input shifts the production function outward, increasing the productivity of the other input. However, the marginal productivity of the added input is diminishing. 3. The firm determines the profit-maximizing quantities of both inputs by equalizing marginal revenue pr

Author

Tinashe Majada

Language

EN