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Unformatted text preview: K-dimensional Euclidean space. A vector z in this space is interpreted as a production combination; positive components in z are inter-preted as outputs and negative components as inputs. Producers Preferences It is assumed that the goal of the producer (frm) is to maximize proFts. The competitive producer faces a vector of prices p = ( p k ) k = 1, ... , K (for inputs and outputs). If he chooses z , his proFts (revenues minus costs) will be pz = k k = 1 p k z k . In other words, it is assumed that his preferences over any set of possible production combinations are represented by the utility function pz . Technology A producers choice set is called a technology and speciFes the pro-duction constraints....
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- Fall '10