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Extra info for 60 Easy-To-Knit Pattern Stitches (Leisure Arts #932)
4) Commodity production uniformly requires one period. How do these assumptions influence the decision-making process of a firm that wants to introduce a certain commodity into the market at the beginning of period t+ I? First, it looks for a suitable production process. In other words, it chooses from the set of technically known production processes, Gb let us say [x(t),y(t+ I )], that will yield the desired output. Since perfectly organized markets exist for all commodities, the required inputs x(t) can be purchased at the beginning of period t from the corresponding market, at present value prices pet).
As was mentioned in Chapter 1, capital is viewed here as stock of produced means of production. 4). ~:ss ) periods . 4 A simple profit maximizing calculation shows that the allocation of a capital goods stock is efficient, if the costs of producing this stock equal the sum of discounted returns from selling the flows of services; or expressed in present value prices: The present value of the capital goods stock equals the sum of present values of produced flow of services. 44 This condition is obviously fulfilled, if the market system is intertemporaJly complete.
L and above). (2) Since following period T no further production is planned, one can, without loss of generality, set x(T) = x*(T). 13a) T-I T-I t~1 t~1 L [p(t+ I )y*(t+ I) - p(t)x*(t») > L [p(t+ I )y(t+ I) - p(t)x(t»), which is possible only if, for at least one s p(s+ 1)y*(s+ 1) - p(s)x*(s) > p(s+ I )y(s+ I) - p(s)x(s). 9) is observed. So the contrary to our initial assumption must hold. 1 does not appear very spectacular. We just have found that the classic result of the static allocation theory, which says perfect competition leads to efficiency, also holds true in a dynamic context.