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Chapter 18 - Chapter 18 Technology 18.1 Inputs and Outputs...

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Chapter 18: Technology 18.1 Inputs and Outputs Inputs to production are called factors of production (land, labor, capital, and raw materials). Capital goods are those inputs to production that are themselves produced goods (tractors, buildings, computers, etc). Financial capital is the money used to start up or maintain a business. Physical capital (capital goods) is produced factors of production. Inputs and outputs are measured as flow units: a certain amount of output per week. 18.2 Describing Technological Constraints Nature imposes technological constraints on firms. Only certain combinations and amounts of inputs are feasible ways to produce a given amount of output. The best way to describe feasible production plans is to list all combinations of inputs and outputs, or a production set. To say that some point (x,y) is in the production set is to say that it is technologically possible to produce it. The production set illustrates the possible technological choices a firm faces.
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