ECON 2100 Lecture Notes - Lecture 9: Isoquant, Production Function, Farad
8 May 2016
School
Department
Course
Professor
Document Summary
Multiple-input/single-output model: how much output to produce, and how much of each input to use, to minimize, its cost and maximize its profits. X1 is the quantity of input 1, x2 is the quantity of input 2, x3 is the quantity of input 3, and so on. The production function now becomes y= f(x1, x2, x3, ) The production function is the technological constraint. The market constraint is the price of its output p, and the prices of its inputs w1, w2. In the long run we are all dead, and if not dead, perhaps bankrupt. When two combinations of two inputs produce the same output, it is said that they are production techniques. One must be technologically efficient while the other must be technologically inefficient. An isoquant: a set of efficient production techniques that result in the same quantity of output. If both inputs are scaled proportionately then mp doesn"t change. The slopes of the isoquants are the same.
