Search results with tag "The envelope theorem"

The Envelope Theorem - University of Arizona

where C(q) is the rm’s cost function, which we’ll assume is strictly convex and di erentiable. For the rm, this is a problem with just one decision variable, q, and one parameter, p. The rst-order condition for (P 1) is @ˇ @q (q) = 0 i.e., C0(q) = p | the rm chooses the output level qat which its marginal cost is equal to the market price ...

  Cost, Theorem, Envelope, Marginal, Marginal costs, The envelope theorem