NEW INSIGHT INTO THE CONCAVITY OF EXPENDITURE AND COST FUNCTIONS

The authors focus on the concavity of – analytically identical – expenditure and cost functions. After pointing to the fact that intuitively acceptable explanation of the concavity of both expenditure and cost functions, the fi rst one in prices of goods and the second one in prices of production factors, has been lacking from the literature, the authors offer a new and more plausible proof of concavity.