Factor Demand with Output Price Uncertainty

摘要: The effects of output price uncertainty on a competitive firm's supply and factor demands have recently been explored under the assumption that all decisions are made before is observed. Agnar Sandmo has shown risk-averse, firm with nonrandom cost function will produce smaller if random than it would were known certainty to equal its mean. Raveendra Batra Aman Ullah I extended analysis by considering demands. Among other things, show choose inputs minimize producing whatever level chosen. This result, combined result presence reduces output, implies depend what effect decreased due minimizing levels inputs. Except for rare case inferior factors, Finally, clear from these analyses risk neutral, no In this paper relax chosen My conclusions results noted above really rather sensitive particular assumption. A simple two-input, one-output model employed. One inputs, which call capital, quasi fixed in sense must be input, labor, variable since not until Clearly, determined known. Although labor may poor name input view recent discussions "quasi-fixed" character, seems apparent many situations there can varied short notice. By allowing we considerably alter situation facing firm. If, after observing price, turns out "poor" choice regarding quasi-fixed factor, able partially "adjust" choosing an appropriate input. ability make adjustments what, ex post, appears decision totally lacking resolved. Section basic presented. II risk-neutral carried out, III contains example. IV risk-averse final section some brief concluding comments.