1. Some definition Basic assumption y is changeless, no technical improvement The firm is the price taker. o Profit function m(p)=max{py:y∈Y} When it is one production I(p=I(p, w)=max pf(x)-wX lecture 2 for Chu Kechen Honors Collegelecture 2 for Chu Kechen Honors College 1.Some definition • Basic assumption: – Y is changeless, no technical improvement. – The firm is the price taker. • Profit function: – When it is one production: ( ) max { : } p p =  y y Y   ( ) ( , ) max ( ) = =  p p f x p w x - wx