The relationship between revenue, production and demand functions, and the implications for some microeconomic problems

Michael Landsberger, Abraham Subotnik

Research output: Contribution to journalArticlepeer-review

Abstract

The properties of concave revenue functions (in input terms) are often of considerable importance in the theory of the firm. One reason for this is the similarity between the sufficient conditions for an interior maxima (the requirement that the Hessian matrix be negative semidefinite) and the necessary and sufficient conditions for concavity. However, the concavity assumption imposes severe restrictions on the production and demand functions which apparently have not been acknowledged in the literature. It is the purpose of this note to explore these restrictions and to point out their implications for a proper formulation of some microeconomic problems.

Original languageEnglish
Pages (from-to)95-101
Number of pages7
JournalJournal of Public Economics
Volume8
Issue number1
DOIs
StatePublished - Aug 1977
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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