New answers tagged producer-theory
1
vote
Why can't producers in a competitive market lower the price to attract more customers and drive other competitors out of the market?
In a competitive market with companies with different cost structures, could not the company that produces at the lowest cost sell at a price below the equilibrium price (still obtaining an economic ...
- 58.5k
2
votes
Doubt in Producer's equilibrium when MR=MC, and MC is rising
If production quantity is a continuous variable, then for differentiable revenue and cost functions MR and MC are defined as the derivatives of these functions. In your example, however, production ...
- 7,450
1
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Accepted
General formula of elasticity of substitution
Let's express everything in terms of $x_1$ First of all, the elasticity of substitution is determined keeping output fixed, so
$$
F(x_1, x_2) = C.
$$
For a constant $C$. This gives:
$$
F_1 + F_2 \frac{...
- 12.8k
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