Use profit-maximization and revealed choices by firms to show the law of supply. Be sure to define what is meant by the law of supply?

Question: Use profit-maximization and revealed choices by firms to show the law of supply. Be sure to define what is meant by “the law of supply”?

Hint:

p1 q1 – w x1 >= p1 q2 – w x2

revealed profits question

theoretical version

prove results when you don’t know the production function

assume production functions are differentiable and continuous

these are results that are true even when the production function is not differentiable

about profit max

q1` x1 and q2 x2 are both feasible

if p1 >= p2

you know nothing else about p1 and p2

then x1 >= x2

no govt involved

w

input demand curve

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