Abstract
The profit-function for a competitive firm may be defined as
where p, w are the prices of the output, y = f(x), and inputs, respectively. If f displays increasing returns to scale π will not be defined. If f displays constant returns to scale π may not be defined.
This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman
Bibliography
Marshall, A. 1890. Principles of economics, 9th (Variorum) ed. London: Macmillan, 1961.
Walras, L. 1874–7. Elements of pure economics. Trans. ed. W. Jaffe. Homewood: Irwin, 1954.
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Eatwell, J. (1987). Zero-Profit Condition. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1302-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1302-1
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Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
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