When single-input producer choice sets are non-convex, the first order condition of the profit maximization problem is neither necessary nor sufficient for identifying the profit maximizing production plan.

Question

Quizplus · Accepted Answer

When the producer choice sets are non-convex, the profit maximizing production plan may not even exist or may exist at multiple points. Therefore, the first-order condition alone is not sufficient to identify the profit-maximizing plan. Additional analysis, such as using the second-order condition or examining the boundary points of the choice set, may be necessary.

When Single-Input Producer Choice Sets Are Non-Convex, the First Order