<p>There is no direct relationship between profit maximisation and cost reduction. </p>

<p>A monopoly can set the profit as high when there is no competition, with little caring of the cost.  In addition, policies incentive may even prevent cost reduction. Product obsolescence will also make cost reduction meaningless. </p>

<p>However, capital and forecast will affect the desire of cost reduction. </p>

<ul>
<li>Take vinyl record for example, there is little incentive to perform further cost reduction, as the market is niche and there is risk when  "vinyl record fashion" subside.</li>
<li>For luxury industry, it is the niche items that drive the demands. Again, cost reduction will hurts the industries. </li>
<li>The EpiPen price scandal show that rent seeker can make profit without cost reduction. Again, it is a capitalist dilemma to invest capital to bring down the cost of such product.. </li>
</ul>

CC BY-SA 3.0
2017-02-21T15:04:57.943Z
2017-02-21T15:04:57.943Z
mootmoot
<p>Does profit maximisation always imply cost minimisation ? And 
Does cost minimization always imply profit maximisation ?
Can we prove both the results ??</p>

CC BY-SA 3.0
2017-02-21T15:35:47.863Z
You can reduce your cost to zero by going out of business which does not maximize your profit.
Bayesian
<microeconomics><profit-maximization>
Profit maximisation and cost minimization
HARSHA VARDHAN
# Profit maximisation and cost minimization

(Asked by: username_0 on 2017-02-21)

Does profit maximisation always imply cost minimisation ? And
Does cost minimization always imply profit maximisation ?
Can we prove both the results ??

**Tags:** microeconomics, profit-maximization

> **Comments:**
> **username_1**: You can reduce your cost to zero by going out of business which does not maximize your profit.  

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## 1 answers

### Answer by username_2 on 2017-02-21. Score: 1

There is no direct relationship between profit maximisation and cost reduction.

A monopoly can set the profit as high when there is no competition, with little caring of the cost. In addition, policies incentive may even prevent cost reduction. Product obsolescence will also make cost reduction meaningless.

However, capital and forecast will affect the desire of cost reduction.

* Take vinyl record for example, there is little incentive to perform further cost reduction, as the market is niche and there is risk when "vinyl record fashion" subside.
* For luxury industry, it is the niche items that drive the demands. Again, cost reduction will hurts the industries.
* The EpiPen price scandal show that rent seeker can make profit without cost reduction. Again, it is a capitalist dilemma to invest capital to bring down the cost of such product..


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