北京大学：《中级微观经济学》课程教学资源（PPT课件讲稿，英文版）Chapter Nineteen Profit-Maximization

Chapter nineteen Profit-Maximization 利润最大化

Chapter Nineteen Profit-Maximization 利润最大化

Structure Economic profit Short-run profit maximization Comparative statics Long-run profit maximization Profit maximization and returns to scale Revealed profit maximization

Structure Economic profit Short-run profit maximization –Comparative statics Long-run profit maximization Profit maximization and returns to scale Revealed profit maximization

Economic profit A firm uses inputs j=1., m to make products i=1,n Output levels are y1.n nput levels are x1…,X Product prices are pis. ,pn. nput prices are w1…,Wm

Economic Profit A firm uses inputs j = 1…,m to make products i = 1,…n. Output levels are y1 ,…,yn . Input levels are x1 ,…,xm. Product prices are p1 ,…,pn . Input prices are w1 ,…,wm

The Competitive Firm The competitive firm takes all output prices p1,--,pn and all input prices as given constants

The Competitive Firm The competitive firm takes all output prices p1 ,…,pn and all input prices w1 ,…,wm as given constants

Economic profit The economic profit generated by the production plan(x1;…,xmy1…yn)is I=p1y1+…+Pnyn-W1X1-…WmXm

Economic Profit The economic profit generated by the production plan (x1 ,…,xm,y1 ,…,yn ) is  = p1 y1 ++pn yn=− w1 x1 −wmxm

Economic profit Output and input levels are ty pically flows E.g. X, might be the number of labor units used per hour And y3 might be the number of cars produced per hour. Consequently, profit is typically a flow also; e.g. the number of dollars of profit earned per hour

Economic Profit Output and input levels are typically flows. E.g. x1 might be the number of labor units used per hour. And y3 might be the number of cars produced per hour. Consequently, profit is typically a flow also; e.g. the number of dollars of profit earned per hour

Opportunity Costs(机会成本) All inputs must be valued at their market value Labor Capital

Opportunity Costs (机会成本) All inputs must be valued at their market value. Labor Capital

Economic profit How do we value a firm? Suppose the firm's stream of periodic economic profits is Io, II1, ∏,∴ and r is the rate of interest. Then the present-value of the firm's economic profit stream is PV=IIo t l+r(1+r)

Economic Profit How do we value a firm? Suppose the firm’s stream of periodic economic profits is 0 , 1 , 2 , … and r is the rate of interest. Then the present-value of the firm’s economic profit stream is PV r r = + + + +  +   0 1 2 1 2 (1 ) 

Profit maximization A competitive firm seeks to maximize its present-value How?

Profit Maximization A competitive firm seeks to maximize its present-value. How?

Short-Run profit maximization Suppose the firm is in a short-run circumstance in which X2= X2 Its short-run production function is y=f(x1,X2) The firms fixed cost is FC=W2X2 and its profit function is ∏=py-W1X1-W2X2

Suppose the firm is in a short-run circumstance in which Its short-run production function is The firm’s fixed cost is and its profit function is y = f(x ,x ~ ). 1 2  = py − w1 x1 − w2 x2 ~ . x2  x2 ~ . FC = w2 x2 ~ Short-Run Profit Maximization