Re: Perelman on Brenner

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Paul:

> the point that I was making is that labour cost
> is not a function of output.


Hi Paul,

This was what I objecting to. The above statement is
not always correct although it is not always incorrect
either.

Consider a law firm for example:

If output is the number of hours you bill to your
clients, then there comes a point after which you need
to hire one more lawyer. The reverse is also true: if
the number of hours you bill is dropping, then there
comes a point after which you fire one of the lawyers.
In this example, the labor cost depends on output in a
most "non-differentiable" way. The labor cost is
basically a step function and at the points I
mentioned above, the marginal costs are infinite. But,
as they say, that happens on a set with "measure
zero", so, in most cases you are right.

Best,

Sabri