COST MINIMIZATION
Let x1 and x2 be two inputs required to produce a good. The production function is
q = f (x1, x2 ) and the prices of the two inputs are p1 and p2 . So the cost of production
is c = p
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CONSUMER BEHAVIOUR THEORY-PART 2
Suppose the first order conditions for maximization holds. Then the convexity of the
indifference curves ensures that the solution is an interior. From Part-1 we know
CONSUMER BEHAVIOUR THEORY-PART 1
1. CONSUMER PREFERENCES
Let X denote the set of consumer bundles. We will consider a 2-good world consisting
of goods 1 and 2, the quantities of which will be denoted
PRODUCER THEORY UNCONSTRAINED OPTIMIZATION
APPLICATIONS
1. The relationship between Total Cost, Average Cost and Marginal Cost
c = c(q) denote the total cost function.
c(q) = MC(q) is the marginal cos
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RELATIONS AND FUNCTIONS
Relation: An association between one entity and another, or a set of ordered pairs.
Ordered Pair: A pair (xi , yi ) such that xi X and yi Y .
Example 1. A set of 5 ordered pair
I. REAL NUMBERS
NATURAL NUMBERS also called POSITIVE INTEGERS: 1, 2, 3,.
NEGATIVE INTEGERS: -1, -2, -3, .
INTEGERS:.,-3, -2, -1, 0, 1, 2, 3,.
Problem: Quotient of two numbers may not be an integer, ex
RATE OF CHANGE AND DERIVATIVE
Consider any function y = f (x) and let x change from x0 to x1. Let Dx = x1 - x0 . So
change from x0 to x1 is the same as change from x0 to x0 + Dx . So the corresponding
SINGLE VARIABLE OPTIMIZATION
The most common criteria for choice is the objective of maximizing (utility, profit) or
minimizing (cost) something. The generic term used is OPTIMIZATION. We begin
with t
IV. SET THEORY
Set is a collection of well-defined objects. The objects are called its elements. Two
sets A and B are considered equal if each element of A is also an element of B and
each element of
Exercises on Nash Equilibrium
1.
Two owners 1 and 2 own a weekend home side by side in a remote area. Each player has two strategies. Hire a truck a truck to
collect the garbage or to dump it in front
Assignment 3480 Semester-2, 2016
Submission date September 21, 2016 by 5 pm
1. Please provide the cover sheet.
2. Submit your assignment in my MAIL BOX located on the East Wing of
Building 11 (Menzies
Exercises on extensive form games.
1. There are two firms 1 and 2. Firm 1 moves first and enters the market. His entry cost is e. Firm 2 moves second and decides whether to
ENTER (E) or NOT ENTER (NE)
ECC 3840
1. Suppose there are two firms F1 and F2 competing in quantities. There is no cost of production and the
market demand is P = a Q. Let Q1 and Q2 be the quantities produced by the two firms. T
Assignment 1: ECC 3840
Due Date: August 23, 2017 by 5 pm
Instructions:
1. Do not forget to put the cover sheet.
2. Keep a copy of your answer sheets with you.
3. Put the hard copy of your assignment i
Assignment 2: ECC 3840
Due Date: September 21, 2017 by 5 pm
Instructions:
1. Do not forget to put the cover sheet.
2. Keep a copy of your answer sheets with you.
3. Put the hard copy of your assignmen
Q1(a) 10 marks
Cobb douglas production function: x= L^aK^b (a+b=1); Production Cost =wL+rK+ F (F=fixed cost)
-show convexity of isoquant
-find cost minimising K*, L*
-find cost function
-draw diagrams
Industrial organization and regulation
Solution, week 6-7, 2017
For week 8 tutorial
1. Horizontal Mergers
Market inverse demand is given by p = 1 Q. Three firms compete `a la
Cournot. Initially all fi
Industrial organization and regulation
Solution, week 5, 2017
For week 6 tutorial
1. Collusion with Cournot Competition
Market inverse demand is given by p = 1 Q. Two firms compete in
quantity and hav
Industrial organization and regulation
Solution to Assignment 1, 2017
1. Group Pricing
There is a unit mass of consumers, each demanding one unit of the goods.
Consumers willingness to pay is uniforml
Industrial organization and regulation
Solution, week 3, 2017
For week 4 tutorial
1. Cournot model with asymmetric costs
Two firms 1 and 2 compete in setting quantities q1 and q2 respectively. The
mar