Factor prices and cost functions

Figure
5.2
We turn now to the study of the price behavior of cost functions. Several
interesting properties follow directly from the definition of the functions.
These are summarized in the following remarks. Note the close analogy
with the properties of the profit function.
Pro0 f,
1) This is obvious, but a formal proof may be instructive. Let x and x'
be cost-minimizing bundles associated with w and w'. Then wx 5 wx'
by minimization and wx'
together gives wx

< w'x' since w 5 w'. Putting these inequalities

< w'x' as required.