tag:blogger.com,1999:blog-3634628224045926034.post399374927456862122..comments2023-08-29T01:27:13.772-07:00Comments on Magpie's Asymmetric Warfare: Friedman's Methodology: Maximally Questionable.Magpiehttp://www.blogger.com/profile/07528637318288802178noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-3634628224045926034.post-10361053004151149212016-11-20T00:55:42.308-08:002016-11-20T00:55:42.308-08:00Not really. I know they have been discussing, but ...Not really. I know they have been discussing, but I can't say I have paid much attention.<br /><br />Have you followed them? What's your opinion?Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-3634628224045926034.post-32613908002306165742016-11-19T22:24:27.480-08:002016-11-19T22:24:27.480-08:00Thanks magpie.
By the way, have you been followin...Thanks magpie.<br /><br />By the way, have you been following the Blackford/Smith debate?<br />http://informationtransfereconomics.blogspot.co.nz/2016/11/blackfords-information-equilibrium-model.html<br /><br />Nigel O.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3634628224045926034.post-46685197018374849542016-11-19T17:28:44.777-08:002016-11-19T17:28:44.777-08:00Isn't the prediction the solution values fro K...<i>Isn't the prediction the solution values fro K and L?</i><br /><br />Hi Higel O.<br /><br />Thanks for your comment.<br /><br />Yes, the instruments are L and K, so the prediction is that (i) the firm chooses K and L, so as to (ii) maximise economic profits.<br /><br />In other words, let's call<br /><br />Eco_Profit(K,L) = p*q(K, L) – w*L – r*K<br /><br />If the solution to the problem of profit maximisation is (K', L') then<br /><br />Eco_Profit(K', L') > Eco_Profit(K, L) for all K, L<br /><br />Note that we are assuming a unique solution (thus, the strict inequality sign).<br /><br />----------<br /><br />Incidentally -- although this does not directly address your question -- I've seen instances of a rather silly mistake being repeated lately, so it may be a good idea to touch on this here.<br /><br />Eco_Profit(K,L) is the so-called <i><b>economic</b></i> profit a firm gets, as opposed to the <i><b>accounting</b></i> profit found in real-life financial statements.<br /><br />In the specific case of expression 1 (a price-taking firm operating in the long-run in a perfectly competitive market)<br /><br />Eco_Profit(K', L') = 0<br /><br />That doesn't mean accounting profit = 0. It may very well be that accounting profit > 0. The idea is that accounting profit calculations do not take opportunity costs into account; once these opportunity costs are subtracted from accounting profit is that one gets economic profit.<br /><br />Nor does it mean that neoclassical firms cannot perceive "rents"; quite to the contrary. Neoclassicals do have models similar to expression 1 for monopolies and oligopolies.<br /><br />When people write stuff like this:<br /><br />http://evonomics.com/economists-duped-attacking-capitalism/<br /><br />They are actually attacking a straw man. And such criticism can be easily and rightfully dismissed.Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-3634628224045926034.post-73134266437436625882016-11-19T16:47:13.411-08:002016-11-19T16:47:13.411-08:00Objection duly noted. Now, feel free to state your...Objection duly noted. Now, feel free to state your case. Normally, I like people to go to the point ASAP.<br /><br />In this case, however, you are free to go on and on on why you disagree with me. :-)Magpiehttps://www.blogger.com/profile/07528637318288802178noreply@blogger.comtag:blogger.com,1999:blog-3634628224045926034.post-55418672181293096032016-11-19T13:08:33.803-08:002016-11-19T13:08:33.803-08:00I'm not sure what the prediction from expressi...I'm not sure what the prediction from expression 1 is. The instruments are K and L. Isn't the prediction the solution values fro K and L?<br /><br />Nigel O.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3634628224045926034.post-19822427729717097922016-11-19T12:32:47.710-08:002016-11-19T12:32:47.710-08:00i vehemently disagre with you on your prowess. onl...i vehemently disagre with you on your prowess. only on that. the rest is okay.<br />- the ooAnonymousnoreply@blogger.com