Short-Run Sales Plan of the Firm: Cost Functions and Equilibrium
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Chapter 3 showed how the firm’s production function could be depicted, and both the linear and smooth functions were illustrated. Although the idea of technically efficient combinations of processes was introduced, no criterion was provided for deciding whether any one point on the isoquant was economically more efficient than any other. This is the problem of cost minimisation — that is, the idea of minimising costs for any given level of output. To illustrate this we need to know input prices.
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