prodchoice.19

prodchoice.19 - Econ 100A Production Choice(Chapter 19...

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Unformatted text preview: Econ 100A: Production: Choice (Chapter 19) Thomas G. Koch Fall 2008 Thomas G. Koch Production: Choice (19) 1(34) Clickers • Turn on your clicker • Hit a button Thomas G. Koch Production: Choice (19) 2(34) What to choose • Firms should maximize something • Subject to another thing • Like consumers and preferences + budget Thomas G. Koch Production: Choice (19) 3(34) Profit π = n X i =1 p i y i- m X j =1 w j x j • p i —price of output good i • y i —amount of output good i • w j —cost of input j • x j —amount of input j Revenues - Costs A firm should maximize this Thomas G. Koch Production: Choice (19) 4(34) What is a cost, w j ? • Could be wages • Could be cost of renting a machine • Could be foregone rent Thomas G. Koch Production: Choice (19) 5(34) What a firm chooses • It depends • If competitive industry, chooses inputs and output • subject to technology • Takes prices as given • Vs. a Monopoly Thomas G. Koch Production: Choice (19) 6(34) Do NFL teams exist in a competitive environment? A Yes B No C Sorta Thomas G. Koch Production: Choice (19) 7(34) Does a farm exist in a competitive environment?...
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prodchoice.19 - Econ 100A Production Choice(Chapter 19...

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