9-21-10 - 9-21-10S2oObjectiveMax profitoChoicesOutputsWhat...

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Unformatted text preview: 9-21-10S2oObjectiveMax profitoChoicesOutputsWhat goods and servicesHow much/ quantities of each outputInputHow they are going to produce themLaborCapital..S3oConsumers have constraintsTechnologyWhat is feasible to produceBudget (-like) constraints from input and output marketsS4 - ExampleoGeneral Electric (GE)OutputsAppliances, tvs, lighting, insurance, energy, healthcareMust decide what markets to pursue and at what scaleInputs how to produce their goods and servicesEngineers, workers, land, factory labor, robots, computers etcWhat are best combinationsConstraintsHow many ways to make tv, turbine, lightbuldTechnologyoSays what is feasible for GE to produceS5 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 - 9-21-10S2oObjectiveMax profitoChoicesOutputsWhat...

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