11.Technology

11.Technology - 1 Technology Professor John W. Diamond ECON...

Info iconThis preview shows pages 1–34. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Technology Professor John W. Diamond ECON 370: Microeconomic Theory Lecture 11 2 Technology: Introduction Technology Process by which inputs are converted to outputs Inputs also called factors of production Input: Labor (L) (skilled, unskilled) Input: Physical capital (K) (equipment, structures, inventories, land, intangibles) Many potential technologies could produce output Main issue: Which technology is best? 3 Input Bundles: Introduction x i- the amount used (level) of input i Input bundle- vector inputs (x 1 , x 2 , , x n ) y- output level Production function describes technology maximum output possible from input bundle implies technical efficiency achieved y f x x n ( , , ) 1 4 Production Functions: One input, one output y = f(x) is production function x Input Output y y = f(x) is max output level obtainable from x input units 5 Technology set - collection of all feasible production plans with x 1 ,...,x n > Technology Sets: Introduction Production plan an input bundle and an output level (x 1 , , x n , y) A production plan is feasible if y f x x n ( , , ) 1 6 Technology Sets: Graph x y y y = f(x) is output level that is feasible from x input units Input Output 7 Technology Sets: Graph x Input Output y y The technology set 8 Technology Sets: Technical Efficiency x y y Technically inefficient plans Technically efficient plans Input Output 9 Technologies with Multiple Inputs The two input, one output case Input levels are x 1 and x 2 Output level is y y=f(x 1 , x 2 ) 10 Max output from inputs (x 1 ,x 2 ) = (8,8) is Technologies: Multiple Inputs Max output from inputs (x 1 , x 2 ) = (1, 8) is 4 2 1 2 8 1 2 2 3 / 1 3 / 1 3 / 1 2 3 / 1 1 x x y 8 2 2 2 8 8 2 2 3 / 1 3 / 1 3 / 1 2 3 / 1 1 x x y Suppose production function is Cobb-Douglas 3 / 1 2 3 / 1 1 2 1 2 ) , ( x x x x f y 11 Technologies with Multiple Inputs Output, y x 1 x 2 (8,1) (8,8) 12 Technologies with Multiple Inputs Isoquant Set of all input bundles yielding output level y Analogous to indifference curve Typically implies substitution across inputs possible (Although can have fixed proportions production function) 13 Isoquants with Two Variable Inputs y y=4 x 1 x 2 y=4 y=8 14 Isoquants in 3-D Output, y x 1 x 2 y y Add third axis for output level y=f(x 1 , x 2 ) 15 Isoquants with Two Variable Inputs y y x 1 x 2 y y 2 More isoquants describe technology better 16 Isoquants with Two Variable Inputs Output, y x 1 x 2 y y y y 2 17 Technologies with Multiple Inputs Isoquant map complete isoquant collection is equivalent to production function Can be represented in 2-D or 3-D For example, if 3 / 1 2 3 / 1 1 2 1 2 ) , ( x x x x f y 18 Technologies with Multiple Inputs x 1 x 2 y 19 Technologies with Multiple Inputs x 1 x 2 y 20 Technologies with Multiple Inputs x 1 x 2 y 21 Technologies with Multiple Inputs x 1 x 2 y 22 Technologies with Multiple Inputs x 1 x 2 y 23 Technologies with Multiple Inputs x 1 x 2 y 24 Technologies with Multiple Inputs x 1 y 25 Technologies with Multiple Inputs x 1 y 26 Technologies with Multiple Inputs x 1 y 27 Technologies with Multiple Inputs x 1 y 28 Technologies with Multiple Inputs x 1 y 29 Technologies with Multiple Inputs x 1 y 30 Technologies with Multiple Inputs x 1 y 31 Technologies with Multiple Inputs x 1 y 32 Technologies with Multiple Inputs x 1 y 33 Technologies with Multiple Inputs x 1 y 34...
View Full Document

Page1 / 90

11.Technology - 1 Technology Professor John W. Diamond ECON...

This preview shows document pages 1 - 34. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online