Profit Maximization Strategy in an Industry: A Sustainable Procedure

Mohajan, Devagit and Mohajan, Haradhan (2022): Profit Maximization Strategy in an Industry: A Sustainable Procedure. Published in: Law and Economy , Vol. 1, No. 3 (20 September 2022): pp. 17-43.

Abstract

This article tries to discuss profit maximization policies by using four variable inputs, such as capital, labor, principal raw materials, and other inputs in an industry, where mathematical economic models are applied by considering budget constraint. For the sustainable production, every industry should apply scientific method, such as mathematical techniques to obtain more accurate results. In the study Cobb-Douglas production function is analyzed with detail mathematical analysis. The sensitivity analysis is included in the operation to show profit maximization that is a pivotal goal of the industry. The economic predictions of future production are provided through the comparative statics to become sure of profit maximization before starting of production in the industry. In the study Lagrange multiplier technique is applied to achieve optimal result in every step of industrial operation.

• Item Type: MPRA Paper
• Language: English
• Keywords: Lagrange multiplier, Cobb-Douglas production function, profit maximization
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C67 - Input-Output Models; D - Microeconomics > D6 - Welfare Economics; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities

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