FUNCTIONAL FORMS IN CONSUMER THEORY
1. COBB-DOUGLAS Consider a utility function given by
UTILITY AND LOG-LINEAR DEMAND SYSTEMS
n
u = v (x) =
i=1
x i = x 1 x 2 x 3 1 2 3 i
(1)
We assume that i > 0. We sometimes assume that n k = 1 . If we maximize utility
A LITTLE REAL ANALYSIS AND TOPOLOGY
1. NOTATION Before we begin some notational denitions are useful. (1) Z = cfw_ , 3, 2, 1, 0, 1, 2, 3, is the set of integers. (2) Q = a : a Z , b Z cfw_0 is the set of rational numbers. b (3) Numbers that cannot be wri
COMPETITIVE EQUILIBRIUM AND SOCIETAL WELFARE
1. GENERAL COMPETITIVE EQUILIBRIUM 1.1. Economic system. An economic system is a collection of consumers, rms, and products and the environment in which they make decisions. We summarize this information as fol
CONSUMER CHOICE
1. THE CONSUMER CHOICE PROBLEM 1.1. Unit of analysis and preferences. The fundamental unit of analysis in economics is the economic agent. Typically this agent is an individual consumer or a rm. The agent might also be the manager of a pub
INTRODUCTION TO MICROECONOMIC THEORY
1. THE SCIENCE OF ECONOMICS Economics is the study of choice under conditions of scarcity or the study of choice with constraints. Specically we say that economics is the study of how individuals and societies choose t
COST FUNCTIONS
1. INTRODUCTION TO
THE
COST FUNCTION
1.1. Understanding and representing technology. Economists are interested in the technology used by the rm. This is usually represented by a set or a function. For example we might describe the technolog
PRODUCTION FUNCTIONS
1. ALTERNATIVE REPRESENTATIONS
OF
TECHNOLOGY
The technology that is available to a rm can be represented in a variety of ways. The most general are those based on correspondences and sets. 1.1. Technology Sets. The technology set for
MERGERS
1. TYPES
OF MERGERS
1.1. Horizontal. Horizontal mergers are mergers between rms which were formerly competitors. A horizontal merger involves two rms who produce products that are considered substitutes by their buyers or by two rms who purchase t
THE NEOCLASSICAL FIRM AND TECHNOLOGY
1. DEFINITION
OF A NEOCLASSICAL FIRM
A neoclassical rm is an organization that controls the transformation of inputs (resources it owns or purchases) into outputs or products (valued products that it sells) and earns t
PROFIT FUNCTIONS
1. REPRESENTATION
OF
TECHNOLOGY
1.1. Technology Sets. The technology set for a given production process is dened as T = cfw_(x, y) : x Rn , y Rm : x can produce y + + where x is a vector of inputs and y is a vector of outputs. The set con
PROFIT MAXIMIZATION
1. DEFINITION
OF A NEOCLASSICAL FIRM
A neoclassical rm is an organization that controls the transformation of inputs (resources it owns or purchases) into outputs or products (valued products that it sells) and earns the difference bet
MEASURING WELFARE CHANGE
1. INTRODUCTION Welfare economics is rst and foremost a policy science. In his classic treatise, A.K. Sen [30] says Welfare economics is concerned with policy recommendations. Gunnar Myrdal [27]in discussing the economist and the