Conditions For Profit Maximization Research Articles

Production Function, Cost of Production, and Associated Optimality Linkages: A Textbook Supplement

One of the most important concepts of production economics, the linkage of costs of production (expressed in terms of output) to the production function, is poorly treated in most intermediate level microtheory and production economics texts. In several texts the linkage is so sketchy it is of limited pedagogical value (e.g., Gould and Ferguson; Heady; Leftwich). The best available treatments are those of Doll, Rhodes, and West, Buse and Bromley, and Goodwin, all of which are in introductory texts. Certainly most students are not ready for abstract, analytical geometries in a first course. However, many upper-division students not only do not understand the input side — output side linkages and the resulting consistency of the input profit-maximizing conditions and the output profit-maximizing conditions, but also become confused as to the meaning of and relationship between marginal revenue and marginal value productivity and between marginal cost and marginal factor cost. Treatments like Goodwin's Figure 9.6 (p. 145) must be reinforced and more fully developed at the intermediate level.

Economics of Depletable Resources and Price Ceiling Induced Bias

In a recent issue of this Journal, Sweeney (1977) investigates the effects of different market imperfections on the extraction pattern of a depletable resource. The imperfections Sweeney considers are depletion allowances, monopoly power, externalities, price regulation, and international vulnerability. Unfortunately, his analysis has been misapplied in the case of price regulation, and in fact, has doubtful applicability to this particular market imperfection. It is the purpose of this note to explain why this qualification applies. This will serve not only to qualify an important piece of theoretical work, but also to exhibit a result which is of interest in its own right. The mistake Sweeney makes in analyzing price regulation is crucial, though quite understandable given the conventional view on the effect of a binding price constraint. As soon as he turns to the price regulation case, Sweeney states, We will assume the prices are limited to not exceed P(t), . . . and that this is a binding constraint. That is, the demand for the resource at any time is assumed to be greater than the quantity supplied, and the actual sales are limited by supply decisions . . . 1 From this, it is concluded that the market price for the resource will be up against the ceiling P(t), with the necessary condition for profit maximization given by

A Comment on Fisher and Temin on the Schumpeterian Hypothesis

Previous articleNext article No AccessCommentsA Comment on Fisher and Temin on the Schumpeterian HypothesisCarlos Alfredo RodriguezCarlos Alfredo Rodriguez Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 87, Number 2Apr., 1979 Article DOIhttps://doi.org/10.1086/260762 Views: 2Total views on this site Citations: 2Citations are reported from Crossref Copyright 1979 The University of ChicagoPDF download Crossref reports the following articles citing this article:Konstantinos Konstantakis, Panayotis G. Michaelides, Theofanis Papageorgiou Sector size, technical change and stability in the USA (1957-2006): a Schumpeterian approach, International Journal of Social Economics 41, no.1010 (Oct 2014): 956–974.https://doi.org/10.1108/IJSE-07-2013-0165 Bibliography, (Dec 2009): 233–255.https://doi.org/10.4324/9780203013052.bmatt

A Search Procedure for Least Squares CES Estimates: A Monte-Carlo Study

Since the C.E.S. production function is non-linear in the parameters, therefore direct estimation of the function requires nonlinear estimation procedures. However, in situations where a non-linear estimation procedure is not available or to avoid possible complications arising from using a nonlinear estimation procedure,1 two indirect methods have been used in the literature to estimate the elasticity of substitution. One technique has been to work with the side condition for labor hiring derived from the first order conditions for profit maximization in competitive product and factor markets (the ACMS method).2 This was first used in the article by Arrow et. al. [1] and subsequently quite extensively [2; 7; 9; 11; 18; 19; 23]. A variant of this method-the side condition for cost minimization in competitive factor markets3-has also been employed.

Utility Maximization Sufficient for Competitive Survival: Comment

Previous articleNext article No AccessCommunicationsUtility Maximization Sufficient for Competitive Survival: CommentRobert PironRobert Piron Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 82, Number 3May - Jun., 1974 Article DOIhttps://doi.org/10.1086/260225 Views: 2Total views on this site Copyright 1974 The University of ChicagoPDF download Crossref reports no articles citing this article.

A Test of the Hypothesis of Economic Rationality in a Less‐developed Economy: An Abstract

SUBSTANTIAL body of economic theory involves the hypothesis of A economic rationality (that is, the hypothesis which assumes that firms have knowledge of their production, cost, and return functions) and implies certain behavior relating to the profit-maximization conditions. The purpose of this paper is to make the hypothesis of profit-maximization directly testable from easily available data and to test it in relation to a group of 430 subsistence farms in an underdeveloped region of Greece.