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SupplySide-Introduction - Application Allocation of...

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Unformatted text preview: Application: Allocation of Production among Multiple Plants !"#$%&'(&!)*+,-" ./)%)0,/1&232 Yet another approach. Maximize output for each level expenditures. Handout 5: The Supply Side & Short Run Costs Supply Side-Introduction Rearrange Equation (1) as: I. Introduction 4-5,%,6,)%&)5&7,"08&7,"01&$"-&,%16,6*6,)%1&69$6&6"$%15)"0&"-1)*"/-1&,%6)&:));1 (3) <*"/9$1-;&=#&/)%1*0-"1>&)69-"&5,"01&$%;&:)?-"%0-%6( @)0<)%-%61&)5&7,"018& 2(&&AB%-"1&C&"-/-,?-&<")5,61&$%;&=-$"&+)11-1 or, maximum output, given expenditures, is obtained when the marginal product of an input D(&&E$%$:-"1&C&;$#C6)C;$#&;-/,1,)%0$F,%: per dollar spent on the input is the same. G(&&H)"F-"1 I(&&J11-61 A":$%,K$6,)%8&& 2(&&L)+-&<")<",-6)"19,< D(&&M$"6%-"19,< G(&&@)"<)"$6,)% N)$+1&)5&7,"018 2(&&M")5,6&0$O,0,K$6,)% D(&&A69-"&:)$+1 H-&B,++&5)/*1&)%&<")5,6C0$O,0,K$6,)%&$1&$&:)$+( J(&&M"-;,/61&=-9$?,)"&)5&5,"01&B-++ !(&&E$%$:-"1&/)0<-%1$6,)%&6,-;&6)&<")5,61&)5&5,"01 @(&&L*"?,?$+&9#<)69-1,18&7,"01&/$%&%)6&,%;-5,%,6-+#&,%/*"&+)11-1(&&7,"01&69$6 ;)&:)&)*6&)5&=*1,%-11>&1)&69$6&1*"?,?,%:&5,"01&$"-&;)0,%$6-;&=#&69)1-&69$6 9$?-&0$%$:-;&6)&9$?-&$;-P*$6-&<")5,6$=,+,6#( © Bryan L. Boulier, 2011. All rights reserved. ...
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