Chapter 18 Technology - Chapter 18 Technology 18.1)Inputs...

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Chapter 18 Technology 18.1) Inputs and Outputs a) Factors of production : Inputs to production b) Capital goods : Inputs to production that are themselves produced goods (machines) c) Financial Capital : Money used to start up or maintain a business d) Physical Capital : Capital goods. 18.2) Describing Technological Constraints a) Technological constraints : Only certain combinations of inputs can produce a given amount of output. b) Production set : Set of all combinations of inputs and outputs that comprise a technologically feasible way to produce. c) Production function : Boundary of the production set. d) Isoquant : Set of all possible combinations of inputs that are just sufficient to produce a given amount of output. Level curves! 18.3) Examples of Technology a) Fixed proportions 1) f(x 1 ,x 2 )=min{x 1 ,x 2 } 2) Graph of isoquants b) Perfect Substitutes 1) f(x 1 ,x 2 )= x 1 +x 2 2) Graph of isoquants
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c) Cobb-Douglas Production Function 1) f(x 1 ,x 2 )=Ax 1 a x 2 b 2) Graph of isoquants:
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This note was uploaded on 10/26/2008 for the course ECON 3130 taught by Professor Masson during the Fall '06 term at Cornell University (Engineering School).

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Chapter 18 Technology - Chapter 18 Technology 18.1)Inputs...

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