The book I am working with (Rubinstein) states that in the case of the profit-maximizing producer, preferences are linear and the constraint is a convex set. Meanwhile, in the consumer model, preferences are convex and the constraint is a linear inequality.

I do understand the part of the consumer model, but I do not understand why he says that preferences of the producer are linear. How is it related to the isoquants?

  • $\begingroup$ Profits are a linear function of production plans. $\endgroup$ Mar 6 at 9:41
  • $\begingroup$ The quote appears at the end of the 5th section of chapter 7 (Production) of Rubinstein's Lecture Notes in Microeconomic Theory. The first five sections of this chapter explain in detail how this claim is derived. Have you read these sections? $\endgroup$
    – VARulle
    Mar 7 at 13:21


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge that you have read and understand our privacy policy and code of conduct.