Optimal output selection

This chapter covers the intuition behind profit-maximization and how this intuition can be used to improve both personal and professional decision-making. The emphasis is on economic decision-making, or comparing costs against benefits in all choices. Among the concepts discussed here are how an agribusiness firm selects outputs under continuously changing prices. The production possibilities frontier is defined and explained, as is the marginal rate of product substitution, and the isorevenue lines are used to find the optimal combination of outputs. The chapter concludes with a brief review of profit-maximization rules for input use, outputs, and input combination.