Teaching Marginal Analysis: On the Importance of Emphasising the Second-Order Condition

Students employ marginal analysis in investigating various problems regarding resource allocation. The majority of first-year students, however, seem to struggle in applying it to a firm′s profit maximisation problem. Their confusion appears to stem from textbooks for introductory microeconomics courses oversimplifying some subtle points regarding the profit maximisation problem. This paper (1) points out how oversimplification may impede students′ understanding, contrary to the instructors′ pedagogical intent, and (2) suggests a complementary method to enhance their understanding of marginal analysis in the course of teaching a firm′s profit maximisation problem.