管理经济学hap05.ppt

Managerial Economics Business Strategy Chapter 5 The Production Process and Costs Overview I. Production Analysis Total Product, Marginal Product, Average Product Isoquants Isocosts Cost Minimization II. Cost Analysis Total Cost, Variable Cost, Fixed Costs Cubic Cost Function Cost Relations III. Multi-Product Cost Functions Production Analysis Production Function Q = F(K,L) The maximum amount of output that can be produced with K units of capital and L units of labor. Short-Run vs. Long-Run Decisions Fixed vs. Variable Inputs Total Product Cobb-Douglas Production Function Example: Q = F(K,L) = K.5 L.5 K is fixed at 16 units. Short run production function: Q = (16).5 L.5 = 4 L.5 Production when 100 units of labor are used? Q = 4 (100).5 = 4(10) = 40 units Marginal Product of Labor MPL = DQ/DL Measures the output produced by the last worker. Slope of the production function Average Product of Labor APL = Q/L Measures the output of an “average” worker. Isoquant The combinations of inputs (K, L) that yield the producer the same level of output. The shape of an isoquant reflects the ease with which a producer can substitute among inputs while maintaining the same level of output. Linear Isoquants Capital and labor are perfect substitutes Leontief Isoquants Capital and labor are perfect complements Capital and labor are used in fixed-proportions Cobb-Douglas Isoquants Inputs are not perfectly substitutable Diminishing marginal rate of technical substitution Most production processes have isoquants of this shape Isocost The combinations of inputs that cost the producer the same amount of money For given input prices, isocosts farther from the origin are associated with higher costs. Changes in input prices change the slope of the isocost line Cost Minimization Marginal product per dollar spent should be equal for all inputs: Expressed differently Cost Minimization Cubic Cost Function C(Q) = f + a Q + b Q2 + cQ3 Marginal Cost? Memorize: MC(Q) = a + 2