Simplification of a Short-run Production Function And Derivation of Corresponding Dual Total Variable Cost Function.

Abstract

This paper derives all the formulae of interest of a short-run production function. For a perfectly competitive firm, this paper derives real profit maximizing labor, output, and real operating profit. For a given nominal wage rate of labor, it derives the corresponding total variable cost function. This paper finds that the outputs corresponding to the point of inflection and Stage I do not correspond with the outputs that minimize the marginal cost and the average variable costs respectively. All the derived formulae are either directly or indirectly in terms of marginal product function maximizing labor.