Cost Analysis
The meaning and measurement of cost
Short-run Cost Functions
Long-run Cost Functions
Scale Economies and Cost
Cobb-Douglas & Long Run
Cost
Slide 1
The Object of Cost Analysis
Managers seek to produce the highest quality
products at the low

Topic
Budgetary and
Other Constraints on Choice
N V M Rao
Consumption Choice Sets
A consumption choice set is the
collection of all consumption
choices available to the consumer.
What constrains consumption
choice?
Budgetary, time and other
resource limi

TOPIC
Choice
Economic Rationality
The principal behavioral postulate is
that a decisionmaker chooses its
most preferred alternative from those
available to it.
The available choices constitute the
choice set.
How is the most preferred bundle in
the choice

Chapter 12
The Partial
Equilibrium
Competitive Model
Market Demand
Assume that there are only two goods (x and
y)
An individuals demand for x is
n
Quantity of x demanded = x(px,py,I)
Market demand for X x i ( px , py , I i )
i
1
If we use i to reflect eac

SIMPLE REGRESSION MODEL
Y
Y 1 2 X
1
X1
X2
X3
X4
X
Suppose that a variable Y is a linear function of another variable X, with unknown
parameters 1 and 2 that we wish to estimate.
1
SIMPLE REGRESSION MODEL
Y
Y 1 2 X
1
X1
X2
X3
X4
X
Suppose that we have a sa

GAUSS-MARKOV CONDITIONS
&
GAUSS-MARKOV THEOREM
GAUSS-MARKOV CONDITIONS AND UNBIASEDNESS OF b1 AND b2
Simple regression model: Y = 1 + 2X + u
Gauss-Markov conditions
1.
E(ui) = 0
This sequence will demonstrate that the OLS estimators of the regression coef

1
TOPIC
Review
Some Basic
Statistical Concepts
Random Variable
random variable:
A variable whose value is unknown until it is observed.
The value of a random variable results from an experiment.
The term random variable implies the existence of some
known