ECO100Y5 Lecture Notes - Lecture 7: Isoquant, Marginal Product, Production Function
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Eco100 lecture 7: technology: technology, production functions. Q (output your firm produces) = f(k(capital), l(is labour): e. g. q=kl, te= technological efficiency = says q is the most you can produce, k/l/q: milk. If our production function is kxl ; you can produce 4 l of milk per hour with two cows and milk pits. Output per workers: ap^+-l (average product) = tr/l; mp^l (marginal. Decision 1 and 2 depend critically on industry structure. Every firm hires worker, which sets capital(k) That decision is conditional on how much output you produce. As manager, your job is to sell coffee as efficiently(cheaply) as possible = cost. Minimization: looks like a curve on a point on a line in a graph. Looking for the lowest line that touches the curve. Tan = mrts = w/r: q = kl = k/l = 1/0. 25 ; k = 4l.
