高级微观经济学Part1_ProductionTheoryIII.pptVIP

lecture3 for Chu Kechen Honors College Advanced Microeconomics(Production Theory Ⅲ) Cost Minimization Content: Definitions Properties of cost function WACM Some forms of cost functions 1.Definitions One production, cost function is The optimal solution x(w,q), is the conditional factor demand function. Question1:calculate the conditional factor demand function of C-D tech. and CES tech. Recall the cost minimization condition, let x0, then set Lagrangian: We got: see the fig. What is? 2.Properties of cost function Proposition1: c(w,q) is homogeneous of degree 1 in w, and non-decreasing in q. Proposition2: c(w,q) is concave function of w. Proposition3: x(w,q) is homogeneous of degree 0 in w. Proposition4: if V(q) is convex, then is x(.) if V(q) is strictly convex, x(.) is single point. Proposition5: (Shephard’s lemma) if x(w,q) is single point, then Proposition6: is symmetric negative semi-definite, and see the fig. Proposition7: if f(.) is HD1, c(.) and x(.) is HD1 too, if f(.) is concave, c(.) is convex in q. 3.WACM Weak Axiom of Cost Minimization (WACM): if xs, xt are in Y, and choice by firm under price ws and wt. then . we can get: WACM WACM 4.Some forms of cost functions If , corresponding price , and is the limited factor (fixed assets), while is the variable factor. The total cost is Envelope theorem: an objective function depend on some parameter. Then: see the prove. LAC and SAC: So See the fig. 5. Duality Given the technology, we can obtain the cost function, are the cost function contains the same information of the technology (production function)? If the answer is “yes”, then t