Chapter_9_Production

Chapter_9_Production - Production functions Average...

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Production functions Average product, marginal product and related concepts Properties of the production technologies No free lunch, Non reversibility, convexity, Free disposability Production in the short run (SR) Idea of Diminishing returns Production in the long run (LR) Isoquants Marginal rate of technical substitutions (MRTS) 2 Ch 9: Production
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What is a production function? A production function is the relationship by which inputs are combined to produce output. Naturally we need some technology that efficiently converts inputs into outputs. Some common assumptions on technology No free lunch: without input there is no output. Non- reversibility: Can’t run the production process in reverse. Free disposability: Throw away the excess without any cost or using more inputs. Convexity: 3 Ch 9: Production
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Mathematically, Let x1 and x2 be inputs then output is produced by the following: Y = F(x1,x2). Frequently encountered inputs: Capital (K) and
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This note was uploaded on 08/03/2011 for the course ECON 203 taught by Professor Okhan during the Spring '11 term at University of Victoria.

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Chapter_9_Production - Production functions Average...

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