productionnotes - Lecture Notes on Production and Cost...

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Lecture Notes on Production and Cost Functions Ted Bergstrom UCSB Econ 210A A very general model of production possibilities can be described as follows: Suppose that there are m goods, some of which may be used as inputs in pro- duction, some of which may be produced as outputs, and some of which may be either inputs or outputs, depending on the process chosen. Let Y f be a set in < m and for any vector ( y 1 , . . . , y m ) Y f , represent a feasible production plan . We interpret y i denote the “net output” of good i in the plan y . If y i is negative, then i is an input for this plan, and if y i is positive, i is an output. Some feasible processes may have more than one output as well as more than one input. Dynamic models in which time plays a significant role in production can be represented in this framework if we treat commodities of the same type that appear at different dates as distinct dated commodities.
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