lecture17full - Third degree price discrimination 2 Third...

Info icon This preview shows pages 1–15. Sign up to view the full content.

View Full Document Right Arrow Icon
Third degree price discrimination 2
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Third degree price discrimination 3
Image of page 2
Marginal revenue and marginal cost
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Graph of third degree price discrimination
Image of page 4
Another Map
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Profit maximization and input demands max x , l , k px - wl - rk subject to x = f ( l , k ) = min { 2 l 1 / 2 , k 1 / 2 }
Image of page 6
Supply function Get supply function by substituting input demands into the production function: x ( w , r , p ) = f ( l ( w , r , p ) , k ( w , r , p )) .
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Profit function Get profit function by substituting input demands and supply function into profits: π ( w , r , p ) = px ( w , r , p ) - wl ( w , r , p ) - rk ( w , r , p ) .
Image of page 8
Hotelling’s Lemma
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Corner solutions 1 Corner solution for input demands when production function is not strictly quasi-concave min { f ( l A , k A ) , f ( l B , k B ) } < f ( tl A + ( 1 - t ) l B , tk A + ( 1 - t ) k B ) for 0 < t < 1 and either l A 6 = l B or k A 6 = k B . 2 Corner solution for output when production function is CRTS or IRTS
Image of page 10
Cost minimization to conditional input demands min l , k wl + rk subject to x = f ( l , k ) = min { 2 l 1 / 2 , k 1 / 2 }
Image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Cost function Substitute conditional input demands into costs to get cost function.
Image of page 12
Cost function to supply function max x px - c ( w , r , x )
Image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Short and long run l w < l k w < 0 x p > x k p > 0
Image of page 14
Image of page 15
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern