The Determination of a Company Production under the Conditions of Minimizing the Production Costs, but Also Profit Maximization

Author:Catalin Angelo Ioan, Gina Ioan
Position:Associate Professor, PhD, Danubius University of Galati, Department of Economics, Romania/Senior Lecturer, PhD, Danubius University of Galati, Department of Economics, Romania
Pages:132-136
European Integration - Realities and Perspectives. Proceedings 2020
132
The Determination of a Company Production under the Conditions of
Minimizing the Production Costs, but Also Profit Maximization
Cătălin Angelo Ioan1, Gina Ioan2
Abstract. The paper deals with the problem of determining the production of a company und er the conditions
in which it wants both the minimization of the production costs and the maximization of the profit.
Keywords: production function; Cobb-Douglas; profit
1. Introduction
Let us consider a firm F whose activity is formalized using a production function Q which depends on
a number of production factors x1,...,xn, n2. In order to ensure its competitiveness on the market, its
main purpose is to reduce its total cost which will implicitly lead to the output of its products at the
lowest possible cost. On the other hand, the company wants to maximize its profit. For example, we
will consider the production function as Cobb-Douglas type, which is equivalent to a constancy of the
elasticities of production in relation to the factors of production, which is not restrictive, at least for a
limited time.
The Cobb-Douglas function has the following expression:
Q:D
-{0}R+, (x1,...,xn)Q(x1,...,xn)=Ax
...
R+ (x1,...,xn)D, A
, 1,...,n
.
x
......
,i=
The main indicators are:
= 
 = 
......
=
, i=
;
=
= Ax
......
=
, i=
;
RMS(i,j)=
, i,j=
;
=
= , i=
;
ij=-1, i,j=
.
1 Associate Professor, PhD, Danubius University of Galati, Department of Economics, Romania, Ad dress: 3 Galati Blvd.,
Galati 800654, Romania, Corresponding author: catalin_angelo_ioan@univ-danubius.ro.
2 Senior Lecturer, PhD, Danubius University of Galati, Department of Economics, Romania, Address: 3 Galati Blvd., Galati
800654, Romania, E-mail: ginaioan@univ-danubius.ro.

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