lecture13full

lecture13full - Profit Maximization with Multiple Inputs...

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Recap 1 One input profit maximization 2 Input demands 3 Supply function 4 Profit function 5 Marginal costs and average costs
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Production and Multiple Inputs x = f ( l , k )
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Profit Maximization with Multiple Inputs
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Quasi-concavity and Concavity A production function is concave when, for 0 t 1, tf ( l A , k A ) + ( 1 - t ) f ( l B , k B ) f ( tl A + ( 1 - t ) l B , tk A + ( 1 - t ) k B ) A production function is quasi-concave when, for 0 t 1, min b f ( l A , k A ) , f ( l B , k B ) B f ( tl A + ( 1 - t ) l B , tk A + ( 1 - t ) k B )
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Quasi-concavity and Concavity 2
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Quasi-concavity and Concavity 3
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Quasi-concavity and Concavity 4
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Diminishing Marginal Product and Returns to Scale
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Unformatted text preview: Profit Maximization with Multiple Inputs max x , l , k px-wl-rk subject to x = f ( l , k ) Example max x , l , k px-wl-rk subject to x = l 1 / 5 k 3 / 5 Example 2 Example 3 Example 4 Corner Solutions When isoquants are linear or bowed the wrong way, use only l or only k Corner Solutions Will have a corner solution in how much you produce when f ( l , k ) is CRTS or IRTS Corner Solutions 2...
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lecture13full - Profit Maximization with Multiple Inputs...

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