Why does Klein characterize the traditional theory of the firm as a calculus problem?
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Why does Klein characterize the traditional theory of the firm as “a calculus problem”?
Started by Murphy, Sep 07 2005 08:34 PM
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#2
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Posted 30 July 2008 - 02:05 PM
The traditonal theory of the firm is one of cost curves, economics of scale and scope, simple math of plusses and minuses of inputs and outputs; more emphasis on accounting than calculation by the entrepreneurs.
#3
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Posted 20 September 2008 - 11:16 PM
Mart Grams, on Jul 30 2008, 02:05 PM, said:
The traditonal theory of the firm is one of cost curves, economics of scale and scope, simple math of plusses and minuses of inputs and outputs; more emphasis on accounting than calculation by the entrepreneurs.
Specifically, "the firm" takes its given production function and its given vector of prices for inputs and outputs, and then chooses the production level that maximizes (Revenues - Expenditures).
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