Class 12: Technology and Cost

Textbook reading: Kreps, Chapter 11, sections 11.1 and 11.2 through “Returns to Scale and Total Cost” (pages 247 to 258), plus the two subsections at the end, “Solving the Cost-Minimization Problem Graphically” and “Inputs without Clearly Defined Prices.” Skip everything with a partial derivative in it, and skip “Rising Marginal Cost and Technology.” Chapter 12 is not assigned; the cost vocabulary it formalizes (fixed, variable, average, marginal, sunk) is in Class 6 and on this page.

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