Lecture 01-2005 - Functions LectureI Function economiccontent Inthedevelopm

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
    Basic Notions of Production  Functions  Lecture I
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Overview of the Production  Function  The production function is a technical  relationship depicting the technical  transformation of inputs into outputs.  The production function in and of itself is devoid of  economic content.  In the development of production functions, we are  interested in certain characteristics that make it  possible to construct economic models based on  optimizing behavior. 
Background image of page 2
    One way to write the production function is as  a function map: which states that the production function ( f ) is  a function that maps  n  inputs into  m  outputs.   By convention, we are only interested in  positive input bundles that yield positive  output bundles.  : n m f R R + +
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    The first lecture will focus on the  production function as a continuous  function as students have probably  seen it in previous courses.  The next  lecture will develop the concept of the  production function more rigorously. 
Background image of page 4
    One Product, One-Variable  Factor Relationships  A commonly used form of the production  function is the “closed form” representation  where the  total physical product  is depicted  as a function of a vector of inputs.  where  y  is the scalar (single) output and  x  is a  vector (multiple) inputs.  ( 29 y f x =
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Focusing for a moment on the single  output case, we could simplify the  above representation to:  or we are interested in examining the  relationship between  x 1  and  y  given that  all the other factors of production are  held constant.  ( 29 1 2 y f x x =
Background image of page 6
    Using this relationship, we want to  identify three primary relationships:  Total physical product –which is the original  production function.  Average physical product –defined as the  average output per unit of input.   Mathematically,  ( 29 f x y APP x x = =
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
    Marginal physical product –defined as the  rate of change in  total physical product  at a  specific input level.  Mathematically,  ( 29 ( 29 ( 29 d TPP d f x dy MPP f x dx dx dx = = = =
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/15/2011 for the course AEB 6184 taught by Professor Staff during the Fall '09 term at University of Florida.

Page1 / 36

Lecture 01-2005 - Functions LectureI Function economiccontent Inthedevelopm

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online