Which of the following is true of cost minimization?
A)It is equivalent to profit maximization.
B)It is sufficient for profit maximization.
C)It is necessary for profit maximization.
D)It is unrelated to profit maximization.

Question

Quizplus · Accepted Answer

Cost minimization is necessary for maximizing profits as reducing costs directly impacts profits. In order to maximize profits, a firm needs to minimize its costs while still producing the optimal level of output. Therefore, option C is correct. Option A is incorrect as profit maximization involves both maximizing revenue and minimizing costs, whereas cost minimization only focuses on the latter. Option B is incorrect as cost minimization alone is not sufficient to maximize profits because it does not take into account revenue generation. Option D is incorrect as cost minimization and profit maximization are related.

Which of the Following Is True of Cost Minimization