Solutions to Financial Economics pp 181-189 | Cite as
6 Theory of the Firm
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Abstract
\(f = \left \{(y_0, y_1) \mid y_1 \leq \sqrt {-y_0}, \; y_0 \leq 0 \right \}\)
- (i)
f is closed: defined by ≤ 0
- (ii)
f convex: since Open image in new window
is concave
- (iii)
y0 < 0, y1 > 0
- (iv)
y0 = 0 ⇒ y1 = 0
- (v)
max production is \(\sqrt {w_0}\)
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