Question

Suppose output price and input prices are fixed. Explain why we need the
assumption of concave production function in order to maximize profit in firm theory?
What if not? Use words and the following graph to explain.

Answer 1

Production function lies in the factors of production that mainly land ,labor, capital and entrepreneurship,

In short run it is possible to maximize the production relates to the quantity of factor inputs used by a business and to the amount of output to that result which prices may or may not fixed.

It is possible by marginal product which explains the change in output from increasing the factors of production. So here diminishing returns in upward. and specifically says that in short run the firm have the ability to this case in maximize the profit according to firms theory. So all cost is variable in long run and fixed in short run