Unformatted text preview: ) = a k ( w , y ) (the k th input commodity). • If C is twice continuously differentiable, then for any two commodi-ties j and k da k / dw j ( w , y ) = da j / dw k ( w , y ). Problem 4. ( Moderately difFcult. Based on Radner (1993). ) It is usually assumed that the cost function C is convex in the output vec-tor. Much of the research on production has been aimed at investigating whether the convexity assumptions can be induced in more detailed mod-els. Convexity often fails when the product is related to the gathering of information or data processing. Consider, for example, a Frm conducting a telephone survey immediately following a TV program. Its goal is to collect information about as many...
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- Fall '10
- Derivative, producer, Convex function, following production functions, kth input commodity, input price wk