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Ami Pro - LN042011

Ami Pro - LN042011 - UCSD Economics 113 Ms S Fried Spring...

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Lecture Notes, April 20, 2011 The Market, Commodities and Prices N commodities x = (x 1 , x 2 , x 3 , ..., x N ) R N , a commodity bundle The market takes place at a single instant, prior to the rest of economic activity. commodity = good or service completely specified description location date (of delivery) [This turns out to be a complicated notion --- we'll discuss this further later in the quarter] Price system : . p i 0 for all i = 1, ..., N. p   p 1 , p 2 ,..., p N   0 Value of a bundle x R N at prices p is p x. Firms and Production Technology F, j F , j = 1, ... , #F. Production technology: j R N . j y Negative co-ordinates of y are inputs; positive co-ordinates are outputs. y Y j , y   2, 3, 0,0,1 Production function f j (x) max { w | (-x, w) j }. The Form of Production Technology Let 0 denote the zero-vector, (0, 0, 0, ..., 0) R N . P.II. 0 j . UCSD Economics 113 Spring 2011 Ms. S. Fried Prof. R. Starr 1
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