9-21-10

9-21-10 - •S2oObjectiveMax •What goods and...

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Unformatted text preview: 9-21-10•S2oObjectiveMax profitoChoicesOutputs•What goods and services•How much/ quantities of each outputInput•How they are going to produce them•Labor•Capital•..•S3oConsumers have constraintsTechnology•What is feasible to produceBudget (-like) constraints from input and output markets•S4 - ExampleoGeneral Electric (GE)Outputs•Appliances, tvs, lighting, insurance, energy, healthcareMust decide what markets to pursue and at what scaleInputs – how to produce their goods and services•Engineers, workers, land, factory labor, robots, computers etc•What are best combinationsConstraints•How many ways to make tv, turbine, lightbuld•TechnologyoSays what is feasible for GE to produce•S5 – Our Plan in the courseoOptimizationoSimplify where possibleoBreak problems into partsProfit = revenue - costsRevenue = output price * output quantity (linear prices)Cost = input prices * input quantitiesoFirst consider input quantities then work on output quantity...
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9-21-10 - •S2oObjectiveMax •What goods and...

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