lecture12full - Get the supply function by substituting...

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Recap 1 Two individuals whose incomes were functions solely of their endowments 2 Used Edgeworth boxes to show: Gains from trade Pareto efficient points The core 3 Solved for market clearing prices 4 First and Second Welfare Theorems 5 The shrinking core
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Short Run Profits π = px - wl
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Production x = f ( l )
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Law of Diminishing Marginal Product
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Profit maximization max x , l px - wl subject to x = f ( l )
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Input demands Property 1: HD0 in prices Property 2: Decreasing in own-input price
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Supply function
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Unformatted text preview: Get the supply function by substituting input demands into the production function. Profit function Get the profit function by substituting input demands and the supply function into profits. Hotelling’s Lemma Variable Costs and Profits max x px-c ( w , x ) Marginal Costs and Average Variable Costs Production and Multiple Inputs x = f ( l , k ) Profit Maximization with Multiple Inputs...
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