ABSTRACT
On a mission to Mars, weight is of prime concern to the crew. If they can determine the least amount of fuel necessary to make it there and back, they will have more weight to allocate toward experiments. Similarly, if firms can determine the leastcost combination of inputs for a given level of output, they will have more dollars to allocate toward profit. With the knowledge of concepts describing the technical aspects of production (Chapter 7), we can discuss how a firm will determine its profitmaximizing combination of output by minimizing costs for this given level of output. The underlying assumption is that a firm’s objective is to maximize profit for a given production technology. According to the Austrian school of thought, firms that do not maximize profits are driven out of the market by competitive forces. Thus, the only firms supplying outputs are maximizing profits.
