Kapitel 6

Question 1

Long-run profit maximization

Answer 1

Maximize revenue - cost with output y and input combination z1z2

alternatively: with cost function:
max π by deriving it by y
-> p=MC
second derivative ≤ 0

Question 2

Long run Supply function

Answer 2

Thus, the long-run supply curve y*(p) is
- the portion of LMC above LACmin if p > LACmin
- the vertical axis (nothing is supplied) if p < LACmin
If the LAC curve is U-shaped, the supply curve is discontinuous at p0 = LACmin.

Question 3

long run profit function

Answer 3

The profit function π(p, p1, p2), obtained by substituting the solution to the profit-maximization problem in the objective function, is the maximum value of profits attainable at the given output price p and input prices pi
- for increasing returns of scale there is no solution to the problem

Question 4

Properties of the profit function

Answer 4

1. Increasing in output price p
2. non decreasing in input prices
3. homogeneous of degree 1in p,p1,p2
4. Hotellings lemma:
   ableitung der profit function nach p: optimale produktions funktion, ableitung nach pi: optimale negative zi*
5. convex in p,p1,p2

Question 5

Short run profit maximization

Answer 5

Question 6

Short run profit maximization Vorgehen

Answer 6

Question 7

Short-run supply curve

Answer 7