chapter_6Production(微观经济学华侨大学,JeffCaldwe.pptxVIP

Chapter 6ProductionChapter 1Topics to be DiscussedThe Technology of ProductionIsoquantsProduction with One Variable Input (Labor)Production with Two Variable InputsReturns to ScaleChapter 1IntroductionOur focus is the supply side.The theory of the firm will address:How a firm makes cost-minimizing production decisionsHow cost varies with outputCharacteristics of market supplyIssues of business regulationChapter 1The Technology of ProductionThe Production ProcessCombining inputs or factors of production to achieve an outputCategories of Inputs (factors of production)LaborMaterialsCapitalChapter 1The Technology of ProductionProduction Function:Indicates the highest output that a firm can produce for every specified combination of inputs given the state of technology.Shows what is technically feasible when the firm operates efficiently.Chapter 1The Technology of ProductionThe production function for two inputs: Q = F(K,L) Q = Output, K = Capital, L = LaborFor a given technologyChapter 1IsoquantsAssumptionsFood producer has two inputsLabor (L) Capital (K)Chapter 1IsoquantsObservations: 1) For any level of K, output increases with more L. 2) For any level of L, output increases with more K. 3) Various combinations of inputs produce the same output.Chapter 1IsoquantsIsoquantsCurves showing all possible combinations of inputs that yield the same outputChapter 1Production Function for FoodLabor InputCapital Input 1 2 3 4 51 20 40 55 65 752 40 60 75 85 903 55 75 90 100 1054 65 85 100 110 1155 75 90 105 115 120Chapter 1Production with Two Variable Inputs (L,K)Capitalper yearThe Isoquant MapE54The isoquants are derivedfrom the productionfunction for output ofof 55, 75, and 90.3ABC2Q3 = 90DQ2 = 751Q1 = 5512345Labor per yearChapter 1IsoquantsInput FlexibilityThe isoquants emphasize how different input combinations can be used to produce the same output.This information allows the producer to respond efficiently to changes in the markets for inputs.Chapter 1IsoquantsThe S