ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

The way to do this is look at each non negativity

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Unformatted text preview: ts. The way to do this is look at each non-negativity constraint that and ask the question: { with zero amounts of The reason is that if the input is essential for production (in the sense that for we need to have ) then there is no need to have the constraint (remember that we don’t need to include constraints with strict inequalities). __________________________________________________________________________ ______________________ For example, suppose a company uses and to produce output in the long run according to a Cobb-Douglas production function; its long run CMP is: { } { } [ ⏟ 29 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. Recall that the target output output with and/or . With the Cobb-Douglas production it is impossible to produce any : If Drop the constraint because for it must be that If Drop the constraint because for it must be that . . In a Cobb-...
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This document was uploaded on 01/19/2014.

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