Economics 2150A/B Lecture Notes - Isoquant, Substitute Good, Production Function

• School: Western University
• Department: Economics
• Course: Economics 2150A/B
• Professor: Prof

Document Summary

=maximum quantity of output that a firm can produce given the quanities of inputs that it might employ. If the firm is producing at technically inefficient points like a and b, then the firm is not maximizing output and producing efficiently. Labour requirements function inverts the production function to show the min amount required to produce a given level of output. of l. Caves and barton found that the typical manufacturer produced only 63% of their potential output given their stocks of l and k. Firms that were more likely to be efficient faced more competition: more competition from abroad, more competition domestically, had better transportation infrastructure. The tp function above shows output as a function of one input holding constant the quantity of the other input. (this represents a short-run scenario. Usually, we say that l is variable and k is fixed in the sr. ) in long run, all inputs are variable.