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Unformatted text preview: s q = L + K, w = 4, r = 2 Cost Minimization: Example 3 s q = min{L,K}, w = 4, r = 2 Substitutability Firms Problem Min L,K wL + rK subject to q = f(L,K) Langrangian Approach Firms Problem Min L,K wL + rK subject to q = f(L,K) Langrangian Approach Firms Problem Min L,K wL + rK subject to q = f(L,K) Alternative Approach Min K wL(q,K) + rK FOC: Dual Approach s Talked about minimizing cost given a fixed output b How about maximizing output given a cost? Max L,K f(L,K) subject to wL + rK C Dual Langrangian Dual Approach: Substituting Constraints Max L,K f(L,K) subject to wL + rK C...
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This note was uploaded on 01/20/2010 for the course ECON 100 taught by Professor Hnewhous during the Spring '08 term at UCSD.
 Spring '08
 hnewhous
 Economics

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