Technology. Production functions Short run and long run Examples of technology Marginal product Technical rate of substitution Returns to scale. Consumers Maximize utility Constraint: budget line. Firms Maximize profits Constraint: production function. Analogies with Consumer Theory.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Constraint: budget line
Constraint: production functionAnalogies with Consumer Theory
How flexible is a firm’s technology?
To obtain a particular output is it possible to substitute one input for another?
At what rate?
Changing Scale of Operations
If a firm doubles all inputs, what happens to output?
Returns to scale.Technology, Flexibility, and Returns to Scale
Measures the rate at which the firm has to substitute one input for another to keep output constantTechnical Rate of Substitution