EC260 Chapter Notes - Chapter 5: Isocost, Isoquant, Machinist
Document Summary
Production process explains how scarce resources (inputs) are used to produce a g/s (output) the relationship between the two. Production involves all activities associate with providing g/s (e. g. employment practices, acquisition of capital resources, and product distribution) Production function is table, graph, or equation showing maximum product output achieved from any specified set of inputs. Summarizes characteristics of existing technology at a time shows technological constraints. Production is dynamic: methods, designs, and factor costs change. : level of first input, : level of second input, q: firm"s output rate. Simplest case has one fixed input and one variable input. Fixed inputs can"t be changed in the short run time needed to change asset is beginning of long term. Variable inputs can be changed in short run (e. g. labour) In the long run, all inputs are variable. Average product (ap): common measuring device for estimating the units of output, on average per input unit.
