Profit Maximization. What is the goal of the firm? Expand, expand, expand: Amazon. Earnings growth: GE. Produce the highest possible quality: this class. Many other goals: happy customers, happy workers, good reputation, etc.
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Max x,y p*y-w*x s.t. y=f(x).
1. Draw isoprofit lines (where profit is constant). Find which is the highest profit line that can be reached with the production function.
2. Substitute in for y and take FOC and solve.
(remember f1(x1,x2)= MP1)