Envelope Theorem

Discipline: Economics

Originally proposed by Canadian economist Jacob Viner (1892-1970) and later developed by American economist Paul Samuelson (1915- ), envelope theorem refers to a curve that encloses an entire family of curves, each of which contributes at least one point to the envelope.

The primary use of the envelope curve is in relating long-run to short-run cost curves.

It has become a fundamental analytical tool in modern economics.

Source:
J Viner, 'Cost Curves and Supply Curves', Readings in Price Theory (Homewood, III., 1952)

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