ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

Eco 204 s ajaz hussain do not distribute for derived

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Unformatted text preview: Ajaz Hussain. Do not distribute. for derived by deriving the cost function and then differentiating it with respect to cost). This is illustrated below: (since the latter is also marginal New iso-cost line Initial iso-cost line New Target Output 1 Initial Target Output 0 ( ) That is, with a higher required minimum amount of input 1, total cost must increase or stay the same (why?). This is illustrated below for the case when the minimum constraint doesn’t bind: Initial and new iso-cost line 0 Target Output New ( ) That is, with a higher required minimum amount of input 2, total cost must increase or stay the same (why?). This is illustrated below for the case when the minimum constraint doesn’t bind: 26 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. Initial and new iso-cost line Target Output 0 New Initial __________________________________________________________________________________________________ Optional (for ECO 2012-2013 students only; starting with ECO 204 Summer 2013 this section will be mandatory)9. We can use envelope theorem...
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This document was uploaded on 01/19/2014.

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