Rubinstein2005-page99 - October 21, 2005 12:18 master Sheet...

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Unformatted text preview: October 21, 2005 12:18 master Sheet number 97 Page number 81 Production 81 logical constraints on the producer is by a production function which specifies, for any positive vector of inputs v R K 1 + , the maximum amount of commodity K that can be produced. If we start from technology Z , we can derive the production func- tion by defining f ( v ) = max { x | ( v , x ) Z } . Alternatively, if we start from the production function f , we can derive the technology by defining Z ( f ) = { ( w , x ) | x y and w v for some y = f ( v ) } . If the function f satisfies the assumptions of f ( ) = 0, continuity, and concavity, then Z ( f ) satisfies the above assumptions. The Supply Function We will now discuss the producers behavior. The producers prob- lem is defined as max z Z pz . The existence of a unique solution for the producer problem re- quires some additional assumptions such as that Z be bounded from above (that is, there is some bound B such that...
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This note was uploaded on 12/29/2011 for the course ECO 443 taught by Professor Aswa during the Fall '10 term at SUNY Stony Brook.

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