Application of parabola in micro economics?

Answer 1

In microeconomics, parabolas are often used to represent cost and revenue functions, particularly in determining profit maximization points. For example, a firm's total cost or total revenue functions can be modeled as quadratic equations, allowing economists to analyze the relationships between production levels and associated costs or revenues. The vertex of the parabola can indicate the optimal output level where profit is maximized. Additionally, parabolic shapes can illustrate diminishing returns in production processes.