Chapters+5++10-6-2006+

Chapters+5++10-6-2006+ - Chapter 5 Supply Decisions UCI...

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02/13/10 1 Chapter 5 Supply Decisions Supply Decisions UCI Fall 2006 Instructor: Soheila Crane, Ph.D.
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02/13/10 2 Supply Decisions What is a supplier’s capacity to produce? How does a supplier decide how much to produce?
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02/13/10 3 Questions to ask? What limits a firm’s ability to produce? What costs are incurred in producing a good? How do costs affect supply decisions?
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02/13/10 4 Production Function The maximum level of output attainable from different combinations of factor inputs/resources A technological summary of the ability of a producer to produce a particular good
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02/13/10 5 Short-Run Production Function In the short-run, some input factors of production are fixed in quantity. Land Capital In the short-run, only certain input factors are variable Short-run production function shows how output changes when a certain variable input factor changes
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02/13/10 6 An Example: Short-Run Production Function Production Function A B C D E F G H I Labor Input (workers per day) 0 1 2 3 4 5 6 7 8 Output (pairs of jeans per day) 0 15 34 44 48 50 51 51 47
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02/13/10 7 Short-Run Production Function 0 10 20 30 40 50 60 0 1 2 3 4 5 6 7 8 9 Labor Input (workers per day) Pairs of Jeans per day
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Chapters+5++10-6-2006+ - Chapter 5 Supply Decisions UCI...

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