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Results tagged with producer-theory
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user 1601
Study of the behavior of firms in organizing their production and allocating productive resources.
0
votes
If a production function is homothetic, the MRTS is the ratio of the inputs used. But is the...
No, the first statement, that the MRTS is the ratio of the inputs used is already false. A counterexample: the production function
$$
F(K,L) = K + L
$$
is homothetic, the absolute value of the MRTS is …
- 29.7k
2
votes
Are all points on the Long Run Average Cost (LRAC) curve productively efficient?
The statement
"In the short run, only the minimum point on the SRAC curve is productively efficient"
is false.
Suppose producing 1 unit of a good costs 5 dollars. 2 unit costs 8, x>2 units costs 5x. …
- 29.7k
0
votes
Accepted
Slope of isoquants
Okay, so the key is that there are nuances in the notation, they are calculating a full derivative, not a partial derivative. They write between 9.19 and 9.20 that
Because $f_l$ and $f_k$ are functio …
- 29.7k
2
votes
Why are cost functions often assumed to be convex in microeconomics?
In my very limited empirical experience it seemed that cost functions were in fact non-convex for most output levels in the few industries I looked at. Allocating costs to exact parts of a process is …
- 29.7k
10
votes
Accepted
Fixed cost of a firm
It is the first one, $TC(0) = FC$. This is the definition.
Also consider that it is not clear what is "transformed by $q$ in some way". In case of
$$
\frac{5q}{q+1} + \frac{5}{q+1}
$$
are the two fr …
- 29.7k
1
vote
How is production managed with respect to the long run vs the short run?
The way the short run is usually treated is that it is assumed that some decisions have already been made, and in the short run no alteration is possible. E.g.; payment for some input was already made …
- 29.7k