TL;DRAbstract
If the function of the orthodox theory of consumer behavior is to justify the notion of negatively inclined demand curves, the function of the orthodox theory of the firm is to justify the notion of positively inclined supply curves. The orthodox or neoclassical theory of the single-product firm, using only output or price as a strategic variable in a static but highly competitive environment, has been with us for 140 years (ever since Cournot more or less invented it in 1838), during which time it has been repeatedly criticized, particularly in respect of its central assumption that businessmen strive to maximize money profits subject to the constraints of technology and the prevailing pattern of demand.
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If the function of the orthodox theory of consumer behavior is to justify the notion of negatively inclined demand curves, the function of the orthodox theory of the firm is to justify the notion of positively inclined supply curves. The orthodox or neoclassical theory of the single-product firm, using only output or price as a strategic variable in a static but highly competitive environment, has been with us for 140 years (ever since Cournot more or less invented it in 1838), during which time it has been repeatedly criticized, particularly in respect of its central assumption that businessmen strive to maximize money profits subject to the constraints of technology and the prevailing pattern of demand.
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