Optimal output selection
This chapter covers the intuition of proﬁ t maximization, and how this intuition can be used to improve both personal and professional decision making. Emphasis is on economic decision making, or comparing costs against beneﬁ ts in all choices. The concepts discussed here include how an agribusiness ﬁ rm selects outputs under continuously changing prices. The production possibilities frontier is deﬁ ned and explained, as is the marginal rate of product substitution, and the isorevenue lines used to ﬁ nd the optimal output combination. The chapter concludes with a brief review of proﬁ t-maximization rules for input use, outputs, and input combination.