ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

Eco 204 s ajaz hussain do not distribute you should

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Unformatted text preview: ns that raising the lower limit on required capital will either raise or maintain cost of production. Next, we use the KT conditions to see that the linear CMP can have the following possible “cases” ⏟ Propose ⏟ Propose Check if/when Check if/when ⏟ ⏟ Propose Check if/when Check if/when ⏟ ⏟ Propose ⏟ ⏟ Propose ⏟ Check if/when ⏟ Propose Check if/when ⏟ These cases are summarized below: 54 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. Case A Propose ⏟ Case B Check if/when: Propose ⏟ Propose Check if/when: Check if/when: Case C Propose ⏟ ⏟ Check if/when: Propose: Check if/when: Case D Check if/when: ⏟ ⏟ Check if/when: Propose: ⏟ Check if/when: ⏟ Propose: Propose: Right off the bat we see that case A is impossible because with zero labor and capital the firm cannot produce a positive target output. The remaining cases can be un...
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