CHAPTER 6 PRODUCTION

CHAPTER 6 PRODUCTION - ECON 306 CHAPTER 6 THE STRUCTURE OF...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 306 CHAPTER 6 THE STRUCTURE OF PRODUCTION IN THE SHORT RUN AND LONG RUN
Background image of page 1

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

View Full DocumentRight Arrow Icon
© Charles R. Hulten 2010 2 OUTLINE OF LECTURE INTRODUCTION TO THE PRODUCTION FUNCTION THE SHORT-RUN PRODUCTION FUNCTION SHORT-RUN RETURNS TO SCALE AVERAGE AND MARGINAL PRODUCTS LONG-RUN PRODUCTION FUNCTION AND ISOQUANTS LONG-RUN RETURNS TO SCALE LINK BETWEEN LONG AND SHORT RUN
Background image of page 2
© Charles R. Hulten 2010 3 WE ARE NOW IN THE PRODUCERS BOX OF THE CIRCULAR FLOW DIAGRAM PRODUCERS CONSUMERS PRODUCT MARKET FACTOR MARKET C d s L d s C C L L Revenue P ×C Expenditure Income Cost P ×L c L P L P ×L L P ×C c P c
Background image of page 3

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

View Full DocumentRight Arrow Icon
© Charles R. Hulten 2010 4 OUR TRIP THROUGH THE SUPPLY-SIDE BOX: PRODUCTION FUNCTION SHORT RUN AND LONG RUN AVERAGE, MARGINAL, TOTAL PRODUCT RETURNS TO SCALE COST FUNCTIONS SHORT RUN AND LONG RUN AVERAGE, MARGINAL, TOTAL COST FIXED AND VARIABLE COST RETURNS TO SCALE AND COST THE SUPPLY CURVE OF THE FIRM SHORT RUN AND LONG RUN RETURNS TO SCALE AND SUPPLY THE SUPPLY CURVE OF THE COMPETITIVE INDUSTRY
Background image of page 4
© Charles R. Hulten 2010 5 Long-Run Short-run Production Cost The Firm
Background image of page 5

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

View Full DocumentRight Arrow Icon
© Charles R. Hulten 2010 6 THE PRODUCTION FUNCTION IN THE SHORT-RUN Q = F(L) , WHERE Q IS THE QUANTITY OF OUTPUT AND L THE QUANTITY OF THE LABOR IN THE LONG-RUN Q = F(K,L) , SINCE THE QUANTITY OF THE CAPITAL K IS FIXED IN THE SHORT-RUN BUT VARIABLE IN THE LONG-RUN AT THE INDUSTRY OR FIRM LEVEL OF INDUSTRIAL ORGANIZATION, Q = F(K,L,M) , WHERE M IS THE MATERIALS AND ENERGY THAT IS USED
Background image of page 6
© Charles R. Hulten 2010 7 THE SHORT-RUN PRODUCTION FUNCTION THE SHORT-RUN PRODUCTION FUNCTION HAS THE FORM
Background image of page 7

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

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/07/2011 for the course ECON 306 taught by Professor Cramton during the Spring '06 term at Maryland.

Page1 / 27

CHAPTER 6 PRODUCTION - ECON 306 CHAPTER 6 THE STRUCTURE OF...

This preview shows document pages 1 - 8. Sign up to view the full document.

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