ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

inputs cmp will be why do we differentiate with

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Unformatted text preview: KT conditions for this general not ?): [ ( ) inputs CMP will be (why do we differentiate with respect to ( [ ( ) ( but ) ) ) Marginal product of input 1 and ( ) Here ( . Now, in ECO 204, we will always find a solution to this system of equations and in this 2 inputs general CMP we would get solutions for . from which we can compute the optimal cost in terms of parameters as . Now, if we substitute the [⏟ into the Lagrangian equation: [ ( ) Then we get the optimal value of the Lagrangian equation, the “optimized objective of the constrained optimization problem”, where some terms are going to zero (why?): [⏟ [⏟ ( [ ) ⏟ ⏟ This allows us to establish a few general results about the cost of producing a target output in the long run. 23 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. Suppose that after we solve this CMP some parameter were to chan...
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This document was uploaded on 01/19/2014.

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