We will model this firms choice of the cost

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Unformatted text preview: ced in a production period3. We will model this firm’s choice of the cost minimizing mix of inputs needed to produce the target output in that production period -- this model is known as the Cost Minimization Problem (CMP): 1 Thanks: Asad Priyo, Adam Michael Lavecchi, this track for much needed boosts, and especially Akber Nafeh for preparing practice problems from past HWs, tests and finals. For feedback, comments and typos please e-mail [email protected] Note to self: Develop stronger connection between returns to scale and economies of scale to show the concepts are the same when the inputs expansion path is linear an d different otherwise. Thanks to following for feedback: Arshaq Meraj. 2 We will examine production of several goods/services in later chapters. This exogenously given output may be a contracted output, or the revenue maximizing output, or the profit maximizing output, etc. Regardless, we take this target output level as given (a parameter). 3 1 ECO 204 Chapter 12: a Firm’s Cost Minimization Problem (this version 2012-2013) University of Toronto,...
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