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Instructor/LIC:
Arghya Ghosh
E-mail:
[email protected]
Tel:
9385-1347
Office:
ASB 406
Weeks:
7 -12
Theme:
Production, Firms, Market Structure
Technology and Profit
Maximization
Chapter 18: Technology
Chapter 19: Profit Maximization
Technology
Production Functions
Isoquants
Marginal Product
Returns to Scale
Technical rate of substitution
Long run and short run
WEEK 7-Part I- ECON2101-S1 2010
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Technology
Technology describes how inputs are converted
output.
Lecture is being produced by using computer,
projector, software, labour
PRODUCTION FUNCTION: The maximum
amount of output (y) one can produce using
inputs x1, x2 ,…
y
f(x
x
)
y = f(x
1
, x
2 , …
WEEK 7-Part I- ECON2101-S1 2010
4
Production Function
One input, one output
y = f(x) is the production
’
y = f(x) is the production
function.
y = f(x)
y’
y
f(x)
y’ = f(x’) is the maximal
output level obtainable
from x’ input units.
x’
x
from x input units.
WEEK 7-Part I- ECON2101-S1 2010
x
Input Level
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Production Function with more than
one input
Labour and Capital used for
manufacturing production
Labour and Land for agricultural
production
How are different factors/inputs
combined to produce output?
ISOQUANTS :
combination of
different inputs that produce same
level of output
WEEK 7-Part I- ECON2101-S1 2010
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