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Topic: Problem 3.42 and 3.49
Conf: Chapter 3, Theory of the Firm, Msg: 14998
From: Martin Caley (martin.caley@economics.treasury.gov.im)
Date: 11/22/2004 06:40 AM
Problem 3.42 and 3.49 Martin Caley MCaley martin.caley@economics.treasury.gov.im
For Exercise 3.42, try page 142 of Mas-Colell, Whinston and Green, 'Microeconomic Theory' but watch out for the slight error on line minus 13.
The proofs of 3.49 (a) and (b) are by contradiction. For example, suppose x^ does not solve (2). Then there exists a x**>=0 such that y**=f(x**) and py**-c(w,y**)=pf(x**)-w.x**>pf(x^)-w.x^=py*-c(w,y*), contradicting the definition of y* in (1). Part (c) follows from y*=f(x*) and c(w,y*)=w.x* as shown in parts (a) and (b).