<p>Firms can be said to pursue cost minimization when they do not have control over demand of their product. In the short run, this implies also that unit prices are fixed. </p>

<p>A standard example here is a Utility, say for electricity. Except in extreme situations of very high demand that reaches the network capacity, consumers consume electricity on demand for a given unit price or price schedule.  So "quantity produced" is not determined by the firm, and so the Cost-minimization problem is the most appropriate (minimize costs given output).</p>

CC BY-SA 4.0
2018-06-05T12:09:04.443Z
2018-06-05T12:09:04.443Z
Alecos Papadopoulos
<p>I understand that profit maximization implies cost minimization, that is, if a firm is maximizing profits, it will definitely minimize costs. </p>

<p>However, under what conditions does cost minimization become an objective in itself?</p>

CC BY-SA 4.0
2018-06-06T05:08:02.643Z
Profit maximization does *not* imply cost minimization.
Herr K.
CC BY-SA 4.0
2018-06-10T09:50:21.563Z
Are there any conditions under which profit maximization does imply cost minimization?
PGupta
CC BY-SA 4.0
2018-06-10T09:51:44.250Z
On a different note, we can derive the w = MRPL condition from P=MC condition. Doesn't that mean profit maximization implies cost minimization under perfect competition?
PGupta
<profit-maximization>
When do firms pursue the cost minimization objective instead of profit maximization? Are there any intuitive/practical examples/reasons?
Parul Gupta
# When do firms pursue the cost minimization objective instead of profit maximization? Are there any intuitive/practical examples/reasons?

(Asked by: username_0 on 2018-06-05)

I understand that profit maximization implies cost minimization, that is, if a firm is maximizing profits, it will definitely minimize costs.

However, under what conditions does cost minimization become an objective in itself?

**Tags:** profit-maximization

> **Comments:**
> **username_1**: Profit maximization does *not* imply cost minimization.  
> **username_2**: Are there any conditions under which profit maximization does imply cost minimization?  
> **username_2**: On a different note, we can derive the w = MRPL condition from P=MC condition. Doesn't that mean profit maximization implies cost minimization under perfect competition?  

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## 1 answers

### Answer by username_3 on 2018-06-05. Score: 1

Firms can be said to pursue cost minimization when they do not have control over demand of their product. In the short run, this implies also that unit prices are fixed.

A standard example here is a Utility, say for electricity. Except in extreme situations of very high demand that reaches the network capacity, consumers consume electricity on demand for a given unit price or price schedule. So "quantity produced" is not determined by the firm, and so the Cost-minimization problem is the most appropriate (minimize costs given output).


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