ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

in a cobb douglas production function all inputs are

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Douglas production function all inputs are essential for production: while we can substitute between inputs, we cannot do without a single input. The long run Cobb-Douglas CMP becomes: { } { } [ By the way, we know that when we solve this problem that . __________________________________________________________________________________________________ As another example, suppose a company uses and to produce output in the long run according to a linear production function; it’s long run CMP is: { { } { { Recall that the target output and/or : } } } [{ . With the linear production } { ⏟ } it is possible to produce output with If { } provided Cannot drop the constraint that or because for it can be If { } provided Cannot drop the constraint that or because for it can be As such, the long run linear CMP is: { } [{ } 30 ECO 204 Chapter 12: a Firm’s Cost Minimization Problem (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. By the...
View Full Document

This document was uploaded on 01/19/2014.

Ask a homework question - tutors are online