Abstract
In this paper, we examine the behavior of the competitive firm faced with making input-hiring decisions under conditions of price uncertainty. Unlike Sandmo and Baron, among others, we show categorically that a marginal increase in uncertainty stimulates a decline in the firm's output, provided the absolute risk aversion is decreasing. Furthermore, the implications of a change in expected price remain unchanged, but those of a change in input price need not be the same as in the certainty case. Specifically, the input demand function is downward sloping only if the production function is well behaved.
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