Chapter 19: Profit Maximization Problem
|
|
- Hope Madlyn Walker
- 5 years ago
- Views:
Transcription
1 Econ 23 Microeconomic Analysis Chapter 19: Profit Maximization Problem Instructor: Hiroki Watanabe Fall 2012 Watanabe Econ PMP 1 / 90 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem 7 Summary Watanabe Econ PMP 2 / 90 1 Introduction Question Firm s Objective Definitions Price-Taker Assumption 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization WatanabeProblem Econ PMP 3 / 90 7 Summary
2 Question Question 1.1 (Agenda for Today) 1 What is Jack s hiring and investment plan? In the short run and long run. How do they differ? 2 How does Jack respond to environmental change? 3 What is his labor demand? 4 What would be the limitation of profit maximization problem? Watanabe Econ PMP 4 / 90 Firm s Objective Assumption 1.2 (Firm s Objective) The firm s objective is to maximize their profit. Bake as many as you can? Watanabe Econ PMP 5 / 90 Firm s Objective Hiring too many chefs will reduce the productivity eventually. How does Jack find the right production plan? 1 Dumb Jack: trials and errors. 2 Smart Jack: tangency condition Watanabe Econ PMP 6 / 90
3 Definitions = ( C, K ) denotes the factor price (unit price of inputs). = (10, 1) means hourly wage is $10 and rental rate is $1. Definition 1.3 (Total Cost) Total cost associated with the input bundle ( C, K ) is TC( C, K ) =. If Jack hires 20 chefs and purchases 10 stand mixers under = (1, 1), TC( C = 20, K = 5) = 1 20 = 1 5 = 25. Watanabe Econ PMP 7 / 90 Definitions All the costs are measured in terms of opportunity cost. Jack s financial capital (interest rate =10%): A unit of kitchen Self-financed Borrowed Out-of-pocket 10K 0K Loan 0K 10K Accounting Cost 10K 11K Opportunity Cost 11K 11K K is not 10K but 11K. Watanabe Econ PMP 8 / 90 Definitions Definition 1.4 (Total Revenue) Total revenue from y is TR(y) = py or TR( C, K ) = pƒ ( C, K ). If Jack produces 10 cheesecakes and price is $4, his total revenue is $40. Watanabe Econ PMP 9 / 90
4 Definitions Definition 1.5 (Profit) The economic profit generated by the production plan ( C, K, y) is π( C, K ) = If Jack raised $40 from cheesecakes sales and paid $25 for his employees and kitchen investment, his profit is $15. Watanabe Econ PMP 10 / 90 Definitions 1.6 (Profit Structure) Jack produces cheesecakes y according to y = ƒ ( C, K ) = C K. Factor price is = ( C, K ) = (1, 1) and cheesecake sells for $4 apiece. If he hires 20 chefs and rent out 5 stand mixers, his 1 labor cost is 2 capital cost is 3 total cost is 4 sales volume is 5 total revenue is 6 profit is Watanabe Econ PMP 11 / 90 Price-Taker Assumption Definition 1.7 (Competitive Market) Jack is in a competitive market if he is a price taker. 1 Competitive labor market: C is given. 2 Competitive capital market: K is given. 3 Competitive cheesecake market: p is given. Watanabe Econ PMP 12 / 90
5 Price-Taker Assumption Jack may influence the equilibrium price in reality. 24 Monopoly 25 Monopoly behavior 26 Oligopoly Watanabe Econ PMP 13 / 90 1 Introduction 2 Short-Run Profit Maximization Problem Fixed Cost Short-Run Profit Maximization Problem Solution to Short-Run Profit Maximization Problem Feasible Production Plans Tangency Condition 3 Comparative Statics 4 Long-Run Profit Maximization Problem Watanabe 5 Factor Econ 23 Demand 19 PMP 14 / 90 6 Returns to Scale & Profit Mazimization Problem 7 Summary Fixed Cost Long-run Jack maximizes his profit differently from short-run Jack. 1 Long-run Jack solves long-run profit maximization problem 2 Short-run Jack solves short-run profit maximization problem Watanabe Econ PMP 15 / 90
6 Fixed Cost Recall Definition 5.1 from Chapter 18: Definition 2.1 (Short Run & Long Run) 1 A short run is a circumstance in which a firm is restricted in its choice of at least one input level. 2 A long run is the circumstance in which a firm is unrestricted in its choice of input levels. Watanabe Econ PMP 16 / 90 Fixed Cost Definition 2.2 (Fixed Cost) Fixed cost is a cost that Jack has to pay for the fixed input. Jack has to pay the rent ( K K ) even when y = 0 in the short run. Suppose the size of kitchen if predetermined at K = 5. FC = Watanabe Econ PMP 17 / 90 Fixed Cost Fixed cost may or may not be a sunk cost (cost cannot be recouped, regardless of future actions) depending on the timing: 1 It is sunk after Jack signed up the lease. 2 Not if Jack hasn t signed up the lease yet. Watanabe Econ PMP 18 / 90
7 Short-Run Profit Maximization Problem In the short run, Jack solves the short-run profit maximization problem (SPMP): Problem 2.3 (Short-Run Profit Maximization Problem (SPMP)) Jack maximizes his short run profit given p, ( C, K ): max C π( C, K ) = pƒ ( C, K ) } {{ } C C K } {{ K } total revenue total cost = pƒ ( C, K ) C C FC. Watanabe Econ PMP 19 / 90 Solution to Short-Run Profit Maximization Problem Key: separate what Jack can earn from what Jack can produce for a while and patch them together later. 1 line tells what each production plan earns him. 2 Feasible production plans tell what he can actually produce. Watanabe Econ PMP 20 / 90 Solution to Short-Run Profit Maximization Problem Short-run profit maximization problem is rather easy. Dumb or smart, Jack s kitchen equipment is predetermined at K. All he has to do is to choose the right C, i.e., he just needs to gage the relationship between y and C. Everything else is not at his discretion ( K, p, C, K ). Watanabe Econ PMP 21 / 90
8 What is the relationship among cheesecake y, employment C and profit π then? Forget the production function for a while. As an accountant, tell Jack what combination of C and y (production plan) will generate π be it feasible or not. Watanabe Econ PMP 22 / 90 Definition 2.4 ( Line) An isoprofit line at π contains all the production plans ( C, K, y) that yield the same profit level of π. Once again, we are asking a hypothetical question here. How much profit can Jack earn if his production plan is ( C, K, y)? ( C, K, y) may not be technologically feasible. Watanabe Econ PMP 23 / 90 ( Line) Suppose p = 4, = ( C, K ) = (1, 1), K = 10. Find the isoprofit line at π = 0 and π = 10. Watanabe Econ PMP 24 / 90
9 C y py C C K K π Watanabe Econ PMP 25 / Watanabe Econ PMP 26 / 90 How do we read this graph? Slice off along fixed y or C. 1 Fix y = 10. The more C is, the smaller the profit will be. 2 Fix C = 10. The more y is, the larger the profit will be. Watanabe Econ PMP 27 / 90
10 Proposition 2.6 (Slope of Line) The slope of isoprofit line is given by C p. Proof. Rearrange π = py C C K K. Watanabe Econ PMP 28 / 90 Profit grows as he moves from southeast to northwest. As a profit maximizer, Jack wants to move to the northwesternmost point ( C, y) = (0, a lot)... but can he? Watanabe Econ PMP 29 / 90 Feasible Production Plans Recall p.16 from Chapter 18: 2.7 (Feasible Production Plan) Jack s short-run production function is ƒ ( C, K ) = C K = 10 C when K = 10. His feasible production plan ( C, K, y) satisfies y ƒ ( C, K ) = 10 C. Watanabe Econ PMP / 90
11 Feasible Production Plans Prod Fn 2 Watanabe Econ PMP 31 / 90 Feasible Production Plans The slope of production function measures marginal product of a chef given K = 10. Watanabe Econ PMP 32 / 90 Feasible Production Plans Which production plan should Jack choose? 1 On one hand, the northwestern, the better. 2 On the other, any y > ƒ ( C, K ) is off limit. Watanabe Econ PMP 33 / 90
12 Tangency Condition Watanabe Econ PMP 34 / 90 Tangency Condition Prod Fn 2 Watanabe Econ PMP 35 / 90 Tangency Condition 2 Prod Fn Watanabe Econ PMP 36 / 90
13 Tangency Condition Recall: 1 The slope of production function denotes the marginal product of C. 1 2 The slope of isoprofit line is C p ( Proposition 2.6 ). Jack earns the maximum profit at ( C, K, y) where the production function is just back to back with isoprofit. 1 given K = K. Watanabe Econ PMP 37 / 90 Tangency Condition Condition 2.8 (Tangency Condition) At the optimal production plan ( C, K, y), C p = MP C( C, K ). Watanabe Econ PMP 38 / 90 Tangency Condition What does tangency condition Condition 2.8 mean? C = pmp C ( C ) = C p = MP C( C, K ) C = pmp C ( C, K ) Watanabe Econ PMP 39 / 90
14 Tangency Condition What if C > pmp C ( C, K )? What if C < pmp C ( C, K )? Watanabe Econ PMP 40 / (Short-Run Profit Maximization Problem) Suppose p = 4, = (1, 1), K = 10 and y = ƒ ( C, K ) = C K. Marginal product of chef is K MP C ( C, K ) = 2. How many chefs should Jack hire? C Watanabe Econ PMP 41 / 90 2 Prod Fn Watanabe Econ PMP 42 / 90
15 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics Question 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem Watanabe Econ PMP 43 / 90 7 Summary Question Question 3.1 (Environmental Change & Hiring Decision) How should Jack revise his hiring decision when 1 C 2 p? Watanabe Econ PMP 44 / (Environmental Change & Hiring Decision) Suppose p = 4, = (1, 1), K = 10 and y = ƒ ( C, K ) = C K. Marginal product of chef is K MP C ( C, K ) = 2. How many chefs should he hire or C lay off when 1 C = p = 4 2? Watanabe Econ PMP 45 / 90
16 2 Prod Fn Watanabe Econ PMP 46 / 90 2 Prod Fn Watanabe Econ PMP 47 / 90 2 Prod Fn Watanabe Econ PMP 48 / 90
17 Prod Fn Watanabe Econ PMP 49 / 90 0 Discussion 3.3 (Environmental Change & Hiring Decision) Why does Jack have to downscale when C or p? Watanabe Econ PMP 50 / 90 Tangency condition Condition 2.8 : MP C ( C, K ) = C p. C or p increases the right-hand side. Marginal product is decreasing in C if Jack s technology exhibits diminishing marginal product. 2 Jack has to stop hiring early on when each chef s contribution is still high. 2 Cf. Definition 3.5 in Chapter 18. Watanabe Econ PMP 51 / 90
18 What about other factors? Discussion 3.4 (Change in Fixed Cost) 1 Does K affect the optimal production plan ( C, K, y)? Does he hire more? Does he produce more? 2 Does K affect the optimal production plan ( C, K, y)? 3 Do they affect Jack s decision making process similarly or differently? Watanabe Econ PMP 52 / (Change in Fixed Cost) Suppose p = 4, = (1, 1), K = 10 and K y = ƒ ( C, K ) = C K. MP C ( C, K ) = 2. How does C the optimal production plan ( C, K, y ) change when 1 K = K = Watanabe Econ PMP 53 / 90 2 Prod Fn Watanabe Econ PMP 54 / 90
19 2 Prod Fn Watanabe Econ PMP 55 / 90 2 Prod Fn Watanabe Econ PMP 56 / 90 2 Prod Fn Watanabe Econ PMP 57 / 90
20 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem Solution to Long-Run Profit Maximization Problem Tangency Condition & MRTS 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem Watanabe Econ PMP 58 / 90 7 Summary Solution to Long-Run Profit Maximization Problem Recall Definition 5.1 from Chapter 18: Definition 4.1 (Short Run & Long Run) 1 A short run is a circumstance in which a firm is restricted in its choice of at least one input level. 2 A long run is the circumstance in which a firm is unrestricted in its choice of input levels. Now Jack can change K along with C. Watanabe Econ PMP 59 / 90 Solution to Long-Run Profit Maximization Problem Problem 4.2 (Long-Run Profit Maximization Problem (LPMP)) Given and p, long-run Jack solves max C, K π( C, K ) =. The same condition Condition 2.8 applies to K : K p = MP K( C, K). Watanabe Econ PMP 60 / 90
21 Solution to Long-Run Profit Maximization Problem 2 Prod Fn Kitchen Equipment x K Watanabe Econ PMP 61 / 90 Tangency Condition & MRTS Tangency conditions for long-run profit maximization problem: C p = MP C( C, K ) K p = MP K( C, K ). Then, C = MP C( C, K ) K MP K ( C, K ) C = MRTS( C, K ). K (1) 3 3 Recall Definition 4.1 in Chapter 18. Watanabe Econ PMP 62 / 90 Tangency Condition & MRTS What does (1) mean? Wait for Chapter 20: Cost Minimization Problem. Watanabe Econ PMP 63 / 90
22 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem 7 Summary Watanabe Econ PMP 64 / 90 Question 5.1 (Jack in the Labor Market) Jack simultaneously appears in three markets: 1 Cheesecake market (as a supplier) 2 Labor market (as a buyer) 3 Capital market (as a buyer) How is Jack s hiring decision reflected in labor demand? Watanabe Econ PMP 65 / 90 Definition 5.2 (Factor Demand Function) Factor demand function returns the optimal amount of input for each factor price given other parameters. Watanabe Econ PMP 66 / 90
23 Factor demand is just another way to look at tangency condition Condition 2.8 : C p = MP C( C, K ). Tell Jack ongoing C and he will find C that satisfies Condition 2.8 above. And that is factor demand. We already know the answer ( Question 3.1 ). Watanabe Econ PMP 67 / revisited: 5.3 (Factor Demand) Suppose p = 4, = (1, 1), K = 10 and y = ƒ ( C, K ) = C K. Marginal product of chef is K MP C ( C, K ) = 2. How many chefs should he hire or C lay off when 1 C = 1 2? Watanabe Econ PMP 68 / 90 2 Prod Fn Watanabe Econ PMP 69 / 90
24 2 Prod Fn Watanabe Econ PMP 70 / 90 C 1 2 C Watanabe Econ PMP 71 / 90 Similarly, for other C s, Jack determines his labor demand schedule according to Condition 2.8 : C p = MP K( C, K ). In 5.3 in particular, the factor demand is K 2 = C C p C = C Watanabe Econ PMP 72 / 90
25 5 Factor Demand x C =40/w C 2 4 Wage w ($) C Chefs x C Watanabe Econ PMP 73 / 90 Question 5.4 (Comparative Statics on Factor Demand) What if p plummeted in half? Watanabe Econ PMP 74 / 90 Replace p in Condition 2.8 with p = 2, C p = MP K( C, K ). which leads to K 2 = C C p C = C Watanabe Econ PMP 75 / 90
26 5 4 Factor Demand When p=4: x C =40/w C 2 Factor Demand When p=2: x C =10/w C 2 Wage w ($) C Chefs x C Watanabe Econ PMP 76 / 90 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem IRS Will Explode 7 Summary Watanabe Econ PMP 77 / 90 IRS Will Explode How are returns to scale related to profit maximizing behavior? Not all the technologies are compatible with profit maximization problem. Watanabe Econ PMP 78 / 90
27 IRS Will Explode Fact 6.1 (Returns to Scale & PMP) If Jack is a price taker, 1 decreasing returns to scale: nice. 2 increasing returns to scale: explosion. 3 constant returns to scale: 1 explosion if π > 0 2 nice if π = 0. Watanabe Econ PMP 79 / 90 IRS Will Explode In what follows, consider a short-run profit maximization in which fixed cost is sunk. Watanabe Econ PMP 80 / 90 IRS Will Explode 2 Prod Fn Watanabe Econ PMP 81 / 90
28 IRS Will Explode 2 Prod Fn Watanabe Econ PMP 82 / 90 IRS Will Explode 2 Prod Fn Watanabe Econ PMP 83 / 90 IRS Will Explode 2 Prod Fn Watanabe Econ PMP 84 / 90
29 IRS Will Explode 2 Prod Fn Watanabe Econ PMP 85 / 90 IRS Will Explode CRS Jack is compatible with profit maximization problem only when C p = MP C( C ) and consequently raises zero profit. Watanabe Econ PMP 86 / 90 IRS Will Explode Just because IRS Jack is not compatible with profit maximization problem does not mean he has to be a dumb Jack to find the optimal hiring and investment plan. Call for Chapter 22 Cost Minimization Problem. Watanabe Econ PMP 87 / 90
30 1 Introduction 2 Short-Run Profit Maximization Problem 3 Comparative Statics 4 Long-Run Profit Maximization Problem 5 Factor Demand 6 Returns to Scale & Profit Mazimization Problem 7 Summary Watanabe Econ PMP 88 / 90 Solving short-run and long-run profit maximization problem. Tangency condition: vs feasible production plan. Comparative statics on PMP. Factor demand. Returns to scale compatible with profit maximization problem. Watanabe Econ PMP 89 / 90 accounting cost, 8 capital market, 65 competitive market, 12 constant returns to scale, 79 decreasing returns to scale, 79 diminishing marginal product, 51 factor demand function, 66 factor price, 7 feasible production plan, 20, financial capital, 8 fixed cost, 17 increasing returns to scale, 79 isoprofit, 20 slope of, 28 isoprofit line, 23 labor market, 65 long run, 16, 59 long-run profit maximization problem, 60 marginal product, 32 marginal rate of technical substitution, 62 opportunity cost, 8 π, see profit price taker, 12, 79 production plan, 22 profit, 5, 10 returns to scale, 78 short run, 16, 59 short-run profit maximization problem, 19 SPMP, see short-run profit maximization problem sunk cost, 18 tangency condition, 6, 38, 67 TC, see total cost total cost, 7 total revenue, 9 TR, see total revenue, see factor price
Lecture 1D: Hotelling s Model
Econ 460 Urban Economics Lecture D: Hotelling s Model Instructor: Hiroki Watanabe Summer 0 0 Hiroki Watanabe / 47 Hotelling s Model Monopoly (Liz Alone) 3 Duopoly (Liz & Kenneth) 4 Oligopoly (N ) 5 Now
More informationFixed input/factor of production: quantity of input is fixed regardless of required
Production Theory Short-Run v. Long-Run Fixed input/factor of production: quantity of input is fixed regardless of required output level, e.g. capital or specialized labour Variable input/factor of production:
More informationEcon 410: Micro Theory. Recall from last time. Production: Two Variable Inputs. Production: Two Variable Inputs
Slide Slide Econ 0: Micro Theory Production with Multiple Variable Inputs Monday, October 9 th, 007 When both types of inputs become variable, the same amount of output can be produced with different amounts
More informationFirms and Production Class- FY B.Com /SYBA. By Asst.Prof.Dr.D.R.Vasave
Firms and Production Class- FY B.Com /SYBA By Asst.Prof.Dr.D.R.Vasave Topics The Ownership and Management of Firms. Production. Short-Run Production: One Variable and One Fixed Input. Long-Run Production:
More informationGLOBAL EDITION. Introduction to Agricultural Economics SIXTH EDITION. John B. Penson, Jr. Oral Capps, Jr. C. Parr Rosson III Richard T.
GLOL EDITION Penson, Jr. Capps, Jr. Rosson III Woodward Introduction to gricultural Economics SIXTH EDITION John. Penson, Jr. Oral Capps, Jr. C. Parr Rosson III Richard T. Woodward economics of input
More informationMicro Production and Cost Essentials 2 WCC
Micro Production and Cost Essentials 2 WCC In our previous example, we considered how output changes when we change one, and only one, input. This gave us the TPP curve. We then developed a rule to help
More informationChapter 6. The Production Function. Production Jargon. Production
Chapter 6 Production The Production Function A production function tells us the maximum output a firm can produce (in a given period) given available inputs. It is the economist s way of describing technology
More informationRevised Course Outlines & Pattern of Examinations in the subject of Economics for BA/B.Sc. w.e.f. 1 st Annual Examinations 2018 & onwards
Annexure - 1 Revised Course Outlines & Pattern of Examinations in the subject of Economics for BA/B.Sc. w.e.f. 1 st Annual Examinations 2018 & onwards Paper A: Microeconomics &Basic Mathematical Economics
More informationOBJECTIVE. Explain how managers should determine the optimal method of production by applying an understanding of production processes
OBJECTIVE Explain how managers should determine the optimal method of production by applying an understanding of production processes Theory of the Firm We said we were going to deal with most problems
More informationChapter 6 Production
Chapter 6 Production Read Pindyck and Rubinfeld (2013), Chapter 6 2/5/2015 CHAPTER 6 OUTLINE 6.1 The Technology of Production 6.2 Production with One Variable Input (Labor) 6.3 Production with Two Variable
More informationMikroekonomia B by Mikolaj Czajkowski
Mikroekonomia B by Mikolaj Czajkowski Exam Production 2 Name Group 1) Lauraʹs Internet Services firm can design computer systems according to the function y(k, L) = 3 K L, where K is the amount of Gigabyte
More information2. MANAGERIAL ECONOMICS
Subject Paper No and Title Module No and Title Module Tag 2. MANAGERIAL ECONOMICS 15. PRODUCER S EQUILIBRIUM COM_P2_M15 TABLE OF CONTENTS 1. Learning Outcomes 2. Introduction 3. Isoquants 4. Properties
More informationBackward Induction and Stackelberg Competition
Backward Induction and Stackelberg Competition Economics 302 - Microeconomic Theory II: Strategic Behavior Shih En Lu Simon Fraser University (with thanks to Anke Kessler) ECON 302 (SFU) Backward Induction
More informationRepeated Games. Economics Microeconomic Theory II: Strategic Behavior. Shih En Lu. Simon Fraser University (with thanks to Anke Kessler)
Repeated Games Economics 302 - Microeconomic Theory II: Strategic Behavior Shih En Lu Simon Fraser University (with thanks to Anke Kessler) ECON 302 (SFU) Repeated Games 1 / 25 Topics 1 Information Sets
More informationProduction C H A P T E R. Prepared by: Fernando & Yvonn Quijano
C H A P T E R 6 Production Prepared by: Fernando & Yvonn Quijano CHAPTER 3 OUTLINE 6.1 The Technology of Production 6.2 Production with One Variable Input (Labor) 6.3 Production with Two Variable Inputs
More informationProduction C H A P T E R. Production CHAPTER 6 OUTLINE. 6.1 The Technology of Production. 6.2 Production with One Variable Input (Labor)
C H A P T E R 6 Production Prepared by: Fernando & Yvonn Quijano CHAPTER 6 OUTLINE 6.1 The Technology of Production Production with One Variable Input (Labor) Production with Two Variable Inputs 6.4 Returns
More informationInputs and the Production Function
Chapter 6 ecture Slides Inputs and the Production Function Inputs (factors of production) are resources, such as labor, capital equipment, and raw materials, that are combined to produce finished goods.
More informationCHAPTER LEARNING OUTCOMES. By the end of this section, students will be able to:
CHAPTER 4 4.1 LEARNING OUTCOMES By the end of this section, students will be able to: Understand what is meant by a Bayesian Nash Equilibrium (BNE) Calculate the BNE in a Cournot game with incomplete information
More informationEconS 503 Advanced Microeconomics II 1 Adverse Selection Handout on Two-part tariffs (Second-degree price discrimination)
EconS 503 Advanced Microeconomics II 1 Adverse Selection Handout on Two-part tariffs (Second-degree price discrimination) 1. Introduction Consider a setting where an uninformed firm is attempting to sell
More informationHow economists apply the methods of science. Two simple models the circular flow and the production possibilities frontier.
CHPATER 2 Thinking Like an Economist LEARNING OBJECTIVES: How economists apply the methods of science. Two simple models the circular flow and the production possibilities frontier. The difference between
More informationMonotone Comparative Statics 1
John Nachbar Washington University March 27, 2016 1 Overview Monotone Comparative Statics 1 Given an optimization problem indexed by some parameter θ, comparative statics seeks a qualitative understanding
More informationUnionization, Innovation, and Licensing. Abstract
Unionization Innovation and Licensing Arijit Mukherjee School of Business and Economics Loughborough University UK. Leonard F.S. Wang Department of Applied Economics National University of Kaohsiung and
More informationMASSACHUSETTS INSTITUTE OF TECHNOLOGY
MASSACHUSETTS INSTITUTE OF TECHNOLOGY 15.053 Introduction to Optimization (Spring 2005) Problem Set 4, Due March 8 th, 2005 You will need 88 points out of 111 to receive a grade of 2.5. Note you have 1.5
More informationChapter 10: Externalities Chapter 11: Public Goods and Common Resources
Econ 23 Introduction to Economics: Micro Chapter : Externalities Chapter 11: Public Goods and Common Resources Instructor: Hiroki Watanabe Spring 213 Watanabe Econ 23 Externality & 11 Public Goods 1 /
More informationBargaining Games. An Application of Sequential Move Games
Bargaining Games An Application of Sequential Move Games The Bargaining Problem The Bargaining Problem arises in economic situations where there are gains from trade, for example, when a buyer values an
More informationReview of Consumer Choice
Review of Consumer Choice 1 1. Consumer s problem Which factors determine consumer s choice? 2. Single consumer s demand function 3. What happens when some variables change? Income changes Price changes
More informationMicroeconomics of Banking: Lecture 4
Microeconomics of Banking: Lecture 4 Prof. Ronaldo CARPIO Oct. 16, 2015 Administrative Stuff Homework 1 is due today at the end of class. I will upload the solutions and Homework 2 (due in two weeks) later
More informationECON 301: Game Theory 1. Intermediate Microeconomics II, ECON 301. Game Theory: An Introduction & Some Applications
ECON 301: Game Theory 1 Intermediate Microeconomics II, ECON 301 Game Theory: An Introduction & Some Applications You have been introduced briefly regarding how firms within an Oligopoly interacts strategically
More informationGame Theory: Introduction. Game Theory. Game Theory: Applications. Game Theory: Overview
Game Theory: Introduction Game Theory Game theory A means of modeling strategic behavior Agents act to maximize own welfare Agents understand their actions affect actions of other agents ECON 370: Microeconomic
More informationModeling Strategic Environments 1 Extensive form games
Modeling Strategic Environments 1 Extensive form games Watson 2, pages 11-23 Bruno Salcedo The Pennsylvania State University Econ 42 Summer 212 Extensive form games In order to fully describe a strategic
More informationECON 312: Games and Strategy 1. Industrial Organization Games and Strategy
ECON 312: Games and Strategy 1 Industrial Organization Games and Strategy A Game is a stylized model that depicts situation of strategic behavior, where the payoff for one agent depends on its own actions
More informationTerry College of Business - ECON 7950
Terry College of Business - ECON 7950 Lecture 5: More on the Hold-Up Problem + Mixed Strategy Equilibria Primary reference: Dixit and Skeath, Games of Strategy, Ch. 5. The Hold Up Problem Let there be
More informationAgricultural Production Economics: The Art of Production Theory
University of Kentucky UKnowledge Agricultural Economics Textbook Gallery Agricultural Economics -1 Agricultural Production Economics: The Art of Production Theory David L. Debertin University of Kentucky,
More informationEconS Sequential Move Games
EconS 425 - Sequential Move Games Eric Dunaway Washington State University eric.dunaway@wsu.edu Industrial Organization Eric Dunaway (WSU) EconS 425 Industrial Organization 1 / 57 Introduction Today, we
More informationECON 2100 Principles of Microeconomics (Summer 2016) Game Theory and Oligopoly
ECON 2100 Principles of Microeconomics (Summer 2016) Game Theory and Oligopoly Relevant readings from the textbook: Mankiw, Ch. 17 Oligopoly Suggested problems from the textbook: Chapter 17 Questions for
More informationPROJECT-DRIVEN TECHNOLOGY STRATEGY: KNOWLEDGE <=> TECHNOLOGY
Project Management Institute PROJECT-DRIVEN TECHNOLOGY STRATEGY: KNOWLEDGE TECHNOLOGY Robert N. McGrath, PhD, PMP Table of Contents List of Figures List of Tables and Exhibits List of Abbreviations
More informationLECTURE 8: SPECIAL PRODUCTION FUNCTIONS, PART II ANSWERS AND SOLUTIONS. True/False Questions
LECTURE 8: SPECIAL PRODUCTION FUNCTIONS, PART II ANSWERS AND SOLUTIONS True/False Questions False_ The elasticity of scale of a fixed proportions production function is not defined because the fixed proportions
More informationUnit 1: The Economic Fundamentals Weeks How does scarcity impact the decisions individuals and societies must make?
Economics Teacher: Vida Unit 1: The Economic Fundamentals Weeks 1-4 Essential Questions 1. How does scarcity impact the decisions individuals and societies must make? 2. What roles do individuals and businesses
More informationIntroduction to Industrial Organization Professor: Caixia Shen Fall 2014 Lecture Note 6 Games and Strategy (ch.4)-continue
Introduction to Industrial Organization Professor: Caixia Shen Fall 014 Lecture Note 6 Games and Strategy (ch.4)-continue Outline: Modeling by means of games Normal form games Dominant strategies; dominated
More informationThe Impact of Patent Pools on Further Innovation. Thomas D. Jeitschko* & Nanyun Zhang** March 8, Preliminary and Incomplete; please do not cite.
The Impact of Patent Pools on Further Innovation Thomas D. Jeitschko* & Nanyun Zhang** March 8, 2012 Preliminary and Incomplete; please do not cite. Any comments and suggestions are welcome and appreciated!
More informationWhen the Threat is Stronger than the Execution: Trade Liberalization and Welfare under Oligopoly
When the Threat is Stronger than the Execution: Trade Liberalization and Welfare under Oligopoly Dermot Leahy Maynooth University J. Peter Neary Oxford, CEPR and CESifo ESEM 2016, Geneva August 24, 2016
More informationState Content Standards for Florida
Episode 101 What Is a Biz Kid? Episode 102 What Is Money? Episode 103 How Do You Get Money? Episode 104 What Can You Do with Money? Episode 105 Money Moves Episode 106 Taking Charge of Your Financial Future
More informationApproaching Real-World Interdependence and Complexity
Prof. Wolfram Elsner Faculty of Business Studies and Economics iino Institute of Institutional and Innovation Economics Approaching Real-World Interdependence and Complexity [ ] Reducing transaction costs
More informationMicroeconomics II Lecture 2: Backward induction and subgame perfection Karl Wärneryd Stockholm School of Economics November 2016
Microeconomics II Lecture 2: Backward induction and subgame perfection Karl Wärneryd Stockholm School of Economics November 2016 1 Games in extensive form So far, we have only considered games where players
More information2Q 2017 Results. 11 Aug 2017 MERMAID MARITIME PUBLIC COMPANY LIMITED
MERMAID MARITIME PUBLIC COMPANY LIMITED 2Q 2017 Results 11 Aug 2017 1 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated
More informationWhat Is That Patent Really Worth? Courts Take a Hard Look at the "Reasonable Royalty" Calculation Jonathan D. Putnam Competition Dynamics
What Is That Patent Really Worth? Courts Take a Hard Look at the "Reasonable Royalty" Calculation Jonathan D. Putnam Competition Dynamics Silicon Valley Advanced Patent Law Institute December 6-7, 2012
More informationLecture 1A: Monocentric City Model
Econ 4935 Urban Economics Lecture A: Monocentric City Model Instructor: Hiroki Watanabe Fall 22 Watanabe Econ 4935 A Monocentric City / 9 Central Business District 2 Closed Monocentric City Model 3 Income/Geographic
More informationSince each element is paired with unique element in the range, it is a function.
1. State the domain and range of the relation {( 3, 2), (4, 1), (0, 3), (5, 2), (2, 7)}. Then determine whether the relation is a function. The domain is the set of x-coordinates. The range is the set
More informationCommercialization Strategies that Work
Commercialization Strategies that Work Jenny C. Servo, Ph.D. DAWNBREAKER (585)594-0025 DAWNBREAKER Professional Services firm - Rochester, NY Worked with over 1200 SBIR/STTR firms - Department of Energy,
More informationProduction Functions. Class- M.A by Asst.Prof.amol s. bavaskar
Production Functions. Class- M.A by Asst.Prof.amol s. bavaskar PRODUCTION AND COSTS: THE SHORT RUN Production An entrepreneur must put together resources -- land, labour, capital -- and produce a product
More informationU strictly dominates D for player A, and L strictly dominates R for player B. This leaves (U, L) as a Strict Dominant Strategy Equilibrium.
Problem Set 3 (Game Theory) Do five of nine. 1. Games in Strategic Form Underline all best responses, then perform iterated deletion of strictly dominated strategies. In each case, do you get a unique
More information7 Signs It's Time to Hire a Virtual CFO
7 Signs It's Time to Hire a Virtual CFO A SPECIAL REPORT FROM NEW DIRECTION CAPITAL WWW.NEWDIRECTIONCAPITAL.COM 877-678-6464 7 Signs It's Time to Hire a Virtual CFO The economy is ever changing and the
More informationSummary Overview of Topics in Econ 30200b: Decision theory: strong and weak domination by randomized strategies, domination theorem, expected utility
Summary Overview of Topics in Econ 30200b: Decision theory: strong and weak domination by randomized strategies, domination theorem, expected utility theorem (consistent decisions under uncertainty should
More informationExtensive Form Games. Mihai Manea MIT
Extensive Form Games Mihai Manea MIT Extensive-Form Games N: finite set of players; nature is player 0 N tree: order of moves payoffs for every player at the terminal nodes information partition actions
More informationSession Outline. Application of Game Theory in Economics. Prof. Trupti Mishra, School of Management, IIT Bombay
36 : Game Theory 1 Session Outline Application of Game Theory in Economics Nash Equilibrium It proposes a strategy for each player such that no player has the incentive to change its action unilaterally,
More informationAppendix A. Selected excerpts from behavior modeling session Examples of training screens
Appendix A Selected excerpts from behavior modeling session Examples of training screens Selected Excerpts from Behavior Modeling tape...now, given that we ve talked about how we can use Solver, let s
More informationS. Miller Hello. I m introducing our third speaker. My name is Sarah
Wi$e Up Teleconference Call October 31, 2005 Being a Business Owner Speaker 3 Leslie Michael S. Miller Hello. I m introducing our third speaker. My name is Sarah Miller. I would like to introduce Ms. Leslie
More information3-4 Linear Programming
Warm Up Determine if the given ordered pair is a solution of x + y 6 1. (3, 3) 2. (10, 1) x 2y >10 LEARNING GOALS FOR LESSON 3.4 3.4.1 Write systems of equations modeling real-world situations, 3.4.1 and
More informationTopic 1: defining games and strategies. SF2972: Game theory. Not allowed: Extensive form game: formal definition
SF2972: Game theory Mark Voorneveld, mark.voorneveld@hhs.se Topic 1: defining games and strategies Drawing a game tree is usually the most informative way to represent an extensive form game. Here is one
More informationStep 3- Creating A Good Work Flow Floor Plan For Faster Production And Creating Process Manuals
Step 3- Creating A Good Work Flow Floor Plan For Faster Production And Creating Process Manuals Creating A Well-Organized Floor Plan In Step I talked about Goals, Planning and your current Financial Status.
More information- BUSINESS PLAN WORKBOOK-
- BUSINESS PLAN WORKBOOK- BUSINESS CONTACT DETAILS Business Name: Owner: Address: Telephone: mobile landline e-mail: (if any) Legal Structure: Sole Trader Partnership Limited Company Business Description:
More informationNetwork Economics and the Future of Electric Power. Lynne Kiesling Northwestern University IRLE May 2010
Network Economics and the Future of Electric Power Lynne Kiesling Northwestern University IRLE May 2010 Game plan Overview/refresher on natural monopoly theory as the economic foundation of regulation
More informationWhat (Exactly) Are Patents Worth at Trial? The Smartphone War Example Jonathan D. Putnam Charles River Associates
What (Exactly) Are Patents Worth at Trial? The Smartphone War Example Jonathan D. Putnam Charles River Associates Patent Infringement Damages Making the Most of the End Game! AIPLA Spring Meetings, May
More informationUnit 11: Linear Equations
Section 11.1: General Form: ax + by = c Section 11.2: Applications General Form Section 11.3: Point-Slope Form: y y 1 = m(x x 1 ) KEY TERMS AND CONCEPTS Look for the following terms and concepts as you
More informationSo you think you want to be a consultant?
So you think you want to be a consultant? Bob Cluff The Discovery Group, Inc SIPES Workshop for Independents 16 June 2009 Are you really sure? Consulting, at its heart, is running an independent business
More informationGame Theory -- Lecture 6. Patrick Loiseau EURECOM Fall 2016
Game Theory -- Lecture 6 Patrick Loiseau EURECOM Fall 06 Outline. Stackelberg duopoly and the first mover s advantage. Formal definitions 3. Bargaining and discounted payoffs Outline. Stackelberg duopoly
More informationResource Allocation and Decision Analysis (ECON 8010) Spring 2014 Foundations of Game Theory
Resource Allocation and Decision Analysis (ECON 8) Spring 4 Foundations of Game Theory Reading: Game Theory (ECON 8 Coursepak, Page 95) Definitions and Concepts: Game Theory study of decision making settings
More informationCRAWFORD & COMPANY Annual Meeting of Shareholders
CRAWFORD & COMPANY Annual Meeting of Shareholders May 11, 2016 Charles H. Ogburn, Non-executive Chairman of the Board Harsha V. Agadi, Interim President and Chief Executive Officer Agenda Welcome D. Richard
More informationBecoming a Master of Persuasion. by Brian Tracy
Becoming a Master of Persuasion by Brian Tracy Persuasion power can help you get more of the things you want faster than anything else you do. It can mean the difference between success and failure. It
More informationHow Technological Advancement Affects Economic Growth of Emerging Countries
How Technological Advancement Affects Economic Growth of Emerging Countries Kanupriya Suthar Independent Researcher, Rajasthan, India kanupriyasuthar@gmail.com Abstract With the advent of the era of science
More informationProfitable Consulting Fees
Profitable Consulting Fees Brought to you by: ConsultingVideos.com Copyright (C) 2008 - ConsultingVideos.com Page 1(22) Calculate Hourly Consulting Fees - Method 1 - Copyright (C) 2008 - ConsultingVideos.com
More informationUniversal Credit Self-employment guide
Universal Credit Self-employment guide This guide is to help you understand what you need to do if you are selfemployed and wish to claim Universal Credit. Section A of this guide explains what evidence
More informationGROWTH THROUGH DIGITAL TURNING TECHNOLOGY INTO BUSINESS TRANSFORMATION
GROWTH THROUGH DIGITAL TURNING TECHNOLOGY INTO BUSINESS TRANSFORMATION 1 What Do These Great Companies Have In Common? 2 The DNA Of Digital Masters The What: Using digital technology to transform the customer
More informationFirst Prev Next Last Go Back Full Screen Close Quit. Game Theory. Giorgio Fagiolo
Game Theory Giorgio Fagiolo giorgio.fagiolo@univr.it https://mail.sssup.it/ fagiolo/welcome.html Academic Year 2005-2006 University of Verona Web Resources My homepage: https://mail.sssup.it/~fagiolo/welcome.html
More informationOn Patent Licensing in Spatial Competition
Department of Economics Working Paper No. 01 http://www.fas.nus.edu.sg/ecs/pub/wp/wp01.pdf On Patent Licensing in Spatial Competition Sougata Poddar National University of Singapore Uday hanu Sinha Indian
More informationStudy unit 5: Uncertainty and consumer behaviour
43 ECS2601/1/2012-14 Study unit 5: Uncertainty and consumer behaviour OMIT Omit pages 159-193. 44 ECS2601/1/2012-14 Study unit 6: Production Economics in action Feeding the job generator An adequate and
More informationGOLDEN AND SILVER RATIOS IN BARGAINING
GOLDEN AND SILVER RATIOS IN BARGAINING KIMMO BERG, JÁNOS FLESCH, AND FRANK THUIJSMAN Abstract. We examine a specific class of bargaining problems where the golden and silver ratios appear in a natural
More informationBACK TO WORK ENTERPRISE
BACK TO WORK ENTERPRISE - BUSINESS PLAN WORKBOOK- BUSINESS CONTACT DETAILS Business Name: Owner: P.P.S. No: Address: Telephone: mobile : landline : e-mail: (if any) Legal Structure: Sole Trader Partnership
More informationDynamic Games: Backward Induction and Subgame Perfection
Dynamic Games: Backward Induction and Subgame Perfection Carlos Hurtado Department of Economics University of Illinois at Urbana-Champaign hrtdmrt2@illinois.edu Jun 22th, 2017 C. Hurtado (UIUC - Economics)
More informationCOMPSCI 223: Computational Microeconomics - Practice Final
COMPSCI 223: Computational Microeconomics - Practice Final 1 Problem 1: True or False (24 points). Label each of the following statements as true or false. You are not required to give any explanation.
More informationHow to Structure (and Land!) Profitable Retainer Agreements Summary Handout
Introduction How to Structure (and Land!) Profitable Retainer Agreements Summary Handout A retainer agreement, in its most basic form, is simply an agreement whereby a client pays you a fixed sum of money
More informationGame Theory two-person, zero-sum games
GAME THEORY Game Theory Mathematical theory that deals with the general features of competitive situations. Examples: parlor games, military battles, political campaigns, advertising and marketing campaigns,
More informationNEWS RELEASE FOR WIRE TRANSMISSION: 8:30 A.M. EDT, FRIDAY, APRIL 17, William Zeile: (202) BEA 09-14
NEWS RELEASE FOR WIRE TRANSMISSION: 8:30 A.M. EDT, FRIDAY, APRIL 17, 2009 William Zeile: (202) 606-9893 BEA 09-14 Summary Estimates for Multinational Companies: Employment, Sales, and Capital Expenditures
More information1 Simultaneous move games of complete information 1
1 Simultaneous move games of complete information 1 One of the most basic types of games is a game between 2 or more players when all players choose strategies simultaneously. While the word simultaneously
More informationStability of Cartels in Multi-market Cournot Oligopolies
Stability of artels in Multi-market ournot Oligopolies Subhadip hakrabarti Robert P. Gilles Emiliya Lazarova April 2017 That cartel formation among producers in a ournot oligopoly may not be sustainable
More informationDiscovery: From Concept to the Patient - The Business of Medical Discovery. Todd Sherer, Ph.D.
Discovery: From Concept to the Patient - The Business of Medical Discovery Todd Sherer, Ph.D. Associate Vice President for Research and Director of OTT President Elect, Association of University Technology
More informationIncomplete Information. So far in this course, asymmetric information arises only when players do not observe the action choices of other players.
Incomplete Information We have already discussed extensive-form games with imperfect information, where a player faces an information set containing more than one node. So far in this course, asymmetric
More information39 Years of Learning the Hard Way. Mark A Etrheim, Mastercraft Homes Inc
39 Years of Learning the Hard Way Mark A Etrheim, Mastercraft Homes Inc Marketing- You need to tell the world how good you are! Clear and consistent message. What makes you unique? Sales- You must be able
More informationTake 1 minute to read the following questions. Listen to the recording. Mark down useful notes and answer the following questions.
Unit 4. Job Hunting Part A. Listening (Total: 20 marks) Take 1 minute to read the following questions. Listen to the recording. Mark down useful notes and answer the following questions. Section 1. M.C.
More informationAI and Economic Growth. Philippe Aghion Banque de France 18 June 2018
AI and Economic Growth Philippe Aghion Banque de France 18 June 2018 Introduction AI defined as the capability of a machine to imitate intelligent human behavior AI can be seen as the latest form of
More informationAgenda. Intro to Game Theory. Why Game Theory. Examples. The Contractor. Games of Strategy vs other kinds
Agenda Intro to Game Theory AUECO 220 Why game theory Games of Strategy Examples Terminology Why Game Theory Provides a method of solving problems where each agent takes into account how others will react
More informationTechnological Change, Population, and Growth
Technological Change, Population, and Growth BCPM0058. ECONOMICS Dr. Kumar Aniket Bartlett School of Construction & Project Management Lecture 2 LOOKING BACK The recent rapid, sustained increase in income
More informationAC*. Alliance For Capital Access
AC*. Alliance For Capital Access LEVERAGED BUYOUT SUCCESS STORIES 1919 Pennsylvania Avenue, N.W. Suite 701 Washington, DC 20006 202/429-9628 MaaneTek, Inc. Los Angeles, CA Five years ago, MagneTek existed
More informationStrategic Licensing of Product Innovations
Strategic Licensing of Product Innovations Murray Fulton Professor Department of Agricultural Economics University of Saskatchewan Ph: (306) 966-8507 E-mail: Murray.Fulton@usask.ca Amalia Yiannaka Assistant
More information261 Gorham Road South Portland, ME Company Profile
Company Profile Preservation Management, Inc. (PMI) has been providing comprehensive residential and commercial property management services since 1990. Over the last two decades PMI has grown to manage
More informationCalculus of Several Variables
Benjamin McKay Calculus of Several Variables Optimisation and Finance February 18, 2018 This work is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License. Preface The course is
More informationNeoclassical Economics
Neoclassical Economics A Brief & Selected Intro Sandelin et al. (2014, Chapter 4) [S] + Others 2018 (Comp. by M.İ.) Intro: Neoclassical breakthrough = marginalism! The neoclassical breakthrough
More informationGame Theory ( nd term) Dr. S. Farshad Fatemi. Graduate School of Management and Economics Sharif University of Technology.
Game Theory 44812 (1393-94 2 nd term) Dr. S. Farshad Fatemi Graduate School of Management and Economics Sharif University of Technology Spring 2015 Dr. S. Farshad Fatemi (GSME) Game Theory Spring 2015
More informationFinancing Emerging Growth Companies
Financing Emerging Growth Companies July (8,15,22) 2005 Ravi Sinha/Wilson Zehr Portland State University School of Business July 8, 2005 1:00 1:50 Class overview, review syllabus, grading, case studies
More informationGet Paid More and Promoted Faster: 21 Great Ways to Get Ahead in Your Career
An Excerpt From Get Paid More and Promoted Faster: 21 Great Ways to Get Ahead in Your Career by Brian Tracy Published by Berrett-Koehler Publishers Contents Preface ix Introduction: Taking Charge of Your
More information