This condition says that profits from producing must be greater
than profits from not producing. Condition 22.1 can be rewritten
as
However, note that by definition
where Z is a constant. By substituting Equations 22.3 , 22.4
and 22.5 into Condition 22.2, we get
from which we obtain
This proves Rule 1.
On a per-unit basis, it becomes
TRn−TVCn−TFCn≥TR 0 −TVC 0 −TFC 0[22.2]
TR 0 = 0[22.3]
TVC 0 = 0[22.4]
TFCn=TVC 0 =Z[22.5]
TRn−TVCn≥ 0TRn≥TVCn