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To: phil_will1; justshutupandtakeit
"In describing a producer optimum, we have defined the profit maximization condition with respect the variable factor input (labor) as:"
Please note on the graph that the revenue line is a straight 45 degree angle from the graph axis. IOW, there is a one-to-one relationship between price increases and revenue changes
You're kidding, right? This tells me it's been a really long time since you've opened up an economics book. That slope is for illustration only. That is very common when describing economic theory.


which is to say that the elasticity of demand is ignored.
No, it says that demand is not a factor in profit maximization. That happens when marginal revenue equal marginal costs.


That is because, as the above quote illustrates, this model is based on making labor the variable input factor and holding other factors constant.
The quote above discusses how they "defined the profit maximization condition with respect the variable factor input" when they were "describing a producer optimum" on a completely different page! The page I linked to page isn't discussing "variable factor inputs."
953 posted on 05/22/2005 5:21:00 PM PDT by Your Nightmare
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To: Your Nightmare

Guess you have missed tha fact that the thread is about the FairTax. not theoretical profit maximization, demand curves, or anything else that so warms the heart of the two-handed economists.

Your attempts to drag things off-topic does you no credit.


1,083 posted on 05/24/2005 4:55:26 AM PDT by pigdog
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