Cost Minimization

See also Profit Maximization

Long Run Cost Minimization §

$$mi{n}_{l,k}C=wl+rk\text{such that}x=f(x)$$

• Lagrangian Optimization
• Optimal when Isoquant is tangent to the isocost
  • Higher isoquant is not always better! it just means you’re producing more

Warning

Beware when $MC$ is monotonically decreasing. This means that the firm will produce zero or infinity, which is means it is a special case which you need to analyze separately.