Rubinstein2005-page100

Rubinstein2005-page100 - vector λ p .) 2. z is continuous....

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October 21, 2005 12:18 master Sheet number 98 Page number 82 82 Lecture Seven Figure 7.2 Proft maximization. and on the consumer’s preFerences. Thus, the producer’s problem is similar to that oF the consumer’s dual problem. (See fg. 7.2.) Properties of the Supply and Pro±t Functions Let us turn to some oF the properties oF the supply and proft Func- tions. The properties and their prooFs are analogous to the properties and prooFs in the discussion oF the consumer’s dual problem. Supply Function 1. z p ) = z ( p ) . (The producer’s preFerences are induced by the price vector p and are identical to those induced by the price
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Unformatted text preview: vector λ p .) 2. z is continuous. 3. Assume the supply Function is well defned. IF z ( p ) 6= z ( p ) , we have ( p − p ) [ z ( p ) − z ( p ) ] = p [ z ( p ) − z ( p ) ] + p [ z ( p ) − z ( p ) ] > 0. In particular, iF (only) the k th price increases, z k increases; that is, iF k is an output ( z k > 0), the supply oF k increases; and iF k is an input ( z k < 0), the demand For k decreases. Note that this result, called the law of supply , applies to the standard supply...
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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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