Re: COST FUNTION NUMERICAL

Posted by Zen on Mar 27, 2015; 2:35pm
URL: http://discussion-forum.276.s1.nabble.com/COST-FUNTION-NUMERICAL-tp7595827p7596015.html

Not generally. Consider f(k,l)=2 and v (price per unit of k) =2 and w (price per unit of l) =0.5. Then your cost function doesn't give the right answer. In this case, we have a boundary optimum. For such an isoquant, we must plug in the 2 boundary points and the kink into the objective (cost function) function to find which point minimizes our cost function.