Pseudoconvexity properties  of average cost functions

R.  Enkhbat; N.  Tungalag; A. S.  Strekalovsky

doi:10.3934/naco.2015.5.233

Article Contents

2015, Volume 5, Issue 3: 233-236. Doi: 10.3934/naco.2015.5.233

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Pseudoconvexity properties of average cost functions

1.
The School of Business, National University of Mongolia, P.O.BOX-46/635, Ulaanbaatar 210646
2.
The School of Business, National University of Mongolia, Ulaanbaatar 210646
3.
Institute of System Dynamics and Control Theory, Siberian Branch, Russian Academy of Sciences

Received: October 2014

Revised: June 2015

Published: July 2015

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Abstract

It is well known that short run cost functions of firms are convex functions when production functions are concave [14]. Average cost minimization as a classical economics problem has been studied in fundamental textbooks [14,4,7,8] and in the literature [2,3,9,12,13,1]. However, it seems that less attention so far has been paid to the study of properties of the average cost function and its minimization methods. The aim of this paper is to fulfill this gap. First, we show that average cost functions are pseudoconvex. Second, we develop an algorithm for solving the average cost minimization problem. We implement the algorithm to solve a real carpet manufacturing problem in Mongolia.

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Mathematics Subject Classification: Primary: 49M, 49K.

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