Applied Econometrics with SAS

Chapter 4

Theory of Supply

Contents

4.1 Overview

4.2 The Production Function

4.3 The Cost Function and Derived Factor Demands

4.4 The Profit Function

4.4.1 Profit Derived Factor Demands

4.4.2 Elasticities

4.5 Concepts of Time in Production

4.6 Separability and Aggregation

4.1 Overview

The study of markets is usually approached from one of two perspectives: the demand side or the supply side. In either case, we must model the decision making processes of economic actors. On the supply side, our model is a simplified representation of the real world production of goods and services by firms. A firm may be a private business, partnership, or corporation, and the term can be extended to productive units in areas that may not commonly be thought of ...