ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

For example 35 eco 204 chapter 12 a firms cost

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Unformatted text preview: distribute. Relationship of with Tobacco Products 0.18 0.33 0.51 Strictly convex Food and Kindred Products 0.43 0.48 0.91 Strictly convex Transportation equipment 0.44 0.48 0.92 Strictly convex Apparel and other textiles 0.70 0.31 1.01 (see note below) “Linear” (see note below) Furniture and fixtures 0.62 0.40 1.02 Strictly concave Electronics and electric equipment 0.49 0.53 1.02 Strictly concave Paper and allied products 0.44 0.65 1.09 Strictly concave Petroleum and coal products 0.30 0.88 1.18 Strictly concave Primary metal 0.51 0.73 1.24 Strictly concave Note: Margin of error is In this case may be considered to be “constant returns to scale” ● As the firm use more labor and capital. As we saw in the previous chapter, in theory a firm can produce more output by using more inputs along any of the following (amongst an infinite number of) input expansion paths: Labor and capital increased non-linear path Labor and capital increased in 1:1 ratio Labor and capital increased non-linear path Labor and capital increased in 1:2 ratio Labor and capital increased in 1:0 ratio Now that we have solved for the optimal amounts of labor and capital as a function of the target output () ⏟ [ () ⏟ [ 36 ECO 204 Chapter 12: a Firm’s Cost Minimization Problem (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. And noting that , we see that to produce more output, a firm with a Cobb-Douglas production fun...
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