Deck 8 tostudent - Econ 301 Microeconomics L lick to edit...

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Click to edit Master subtitle style 5/11/11 Lecture 8. Production and cost minimization Professor Mian Dai Spring, 2011 Econ 301 Microeconomics
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5/11/11 A road map for today’s lecture Cost minimization problem Interior and corner solution Comparative statics: Input demand Short run vs. long run
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5/11/11 Cost minimization in the long run In long run, all inputs can be changed. Setup Let the desired output be Q 0 Technology: Q = f(L,K) The problem is to min TC = rK + wL (by choose K and L) Subject to Q 0 = f(L,K) The constrain implies that K, L should be enough to produce the desired output, where r is the price of K and w is the price of L.
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©Jianjun Wu Isocost Lines Isocost line is the set of combinations of labor and capital that yield the same total cost for the firm Isocost line is analogous to the budget line from consumer choice theory. A typical Isocost line is rK wL TC + =
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©Jianjun Wu Cost Minimization: Summary Isoquants characterize your
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This note was uploaded on 05/11/2011 for the course ECON 301 taught by Professor Sheng during the Spring '11 term at ITT Tech Pittsburgh.

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Deck 8 tostudent - Econ 301 Microeconomics L lick to edit...

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