We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byDean Slocumb
Modified about 1 year ago
Slide 1Copyright © 2004 McGraw-Hill Ryerson Limited Chapter 9 Production
Slide 2Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-1 A Production Worker
Slide 3Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-2 The Production Function The production function transforms inputs like land, labour, capital, and manage-ment into output. The box in the diagram embodies the existing state of technological knowledge. Because knowledge has been accumulating over time, we get more output from a given combination of inputs today than we would have gotten in the past.
Slide 4Copyright © 2004 McGraw-Hill Ryerson Limited TABLE 9-1 The Production Function Q = 2KL The entries in the table represent output, measured in meals per week, and are calculated using the formula Q = 2KL.
Slide 5Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-3 A Specific Short- Run Production Function Panel a shows the production function, Q = 2KL, with K fixed at K 0 = 1. Panel b shows how the short-run production function shifts when K is increased to K 1 = 3.
Slide 6Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-4 Another Short-Run Production Function The curvilinear shape shown here is common to many short-run production functions. Output initially grows at an increasing rate as labour increases. Beyond L = 4, output grows at a diminishing rate with increases in labour.
Slide 7Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-5 The Effect of Technological Progress in Food Production F 1 is the production function for food in the year t 1. F 2 is the corresponding function for t 2. Technological progress in food production causes F 2 to lie above F 1. Even though “diminishing returns” applies to both F 1 and F 2, food production grows more rapidly than labour inputs between t 1 and t 2.
Slide 8Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-6 The Marginal Product of a Variable Input At any point, the marginal product of labour, MP L, is the slope of the total pro-duct curve at that point (top panel). For the production function shown in the top panel, the marginal product curve (bottom panel) initially increases as labour increases. Beyond L = 4, however, the marginal product of labour decreases as labour increases. For L > 8 the total product curve declines with L, which means that the marginal product of labour is negative in that region.
Slide 9Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-7 Total, Marginal, and Average Product Curves The average product at any point on the total product curve is the slope of the ray from the origin to that point. For the total product curve shown in the top panel, AP L rises until L = 6, then declines. At L = 6, MP L = AP L. For any L AP L, and for any L > 6, MP L < AP L.
Slide 10Copyright © 2004 McGraw-Hill Ryerson Limited TABLE 9-2 Average Product, Total Product, and Marginal Product (Kg/Day) for Two Fishing Areas The average catch per boat is constant at 100 kg per boat for boats sent to the east end of the lake. The average catch per boat is a declining function of the number of boats sent to the west end.
Slide 11Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-8 Part of an Isoquant Map for the Production Function Q = 2KL An isoquant is the set of all (L, K) pairs that yield a given level of output. For example, each (L, K) pair on the curve labelled Q = 32 yields 32 units of output. The isoquant map describes the properties of a production process in much the same way as an indifference map describes a consumer’s preferences.
Slide 12Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-9 The Marginal Rate of Technical Substitution The MRTS is the rate at which one input can be exchanged for another without altering total output. The MRTS at any point is the absolute value of the slope of the isoquant that passes through that point. If K units of capital are removed at point A, and L units of L are added, output will remain the same at Q 0 units.
Slide 13Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-10 Isoquant Maps for Perfect Substitutes and Perfect Complements In panel a, we get the same number of trips from a given total quantity of gasoline, no matter how we mix the two brands. Esso and Shell are perfect substitutes in the production of automobile trips. In panel b, word processors and typists are perfect complements in the process of typing letters.
Slide 14Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-11 Prefabricated Versus On-Site Construction The angular cuts and standard shapes characteristic of roof framing are more conducive to economies of scale than are the rectangular cuts and idiosyncratic layouts of wall framing. This difference helps explain why wall framing is generally built at the construction site while roof framing is more often prefabricated.
Slide 15Copyright © 2004 McGraw-Hill Ryerson Limited FIGURE 9-12 Return to Scale Shown on the Isoquant Map In the region from A to C, this production function has increasing returns to scale. Proportional increases in input yield more than proportional increases in output. In the region from C to F, there are constant returns to scale. Inputs and output grow by the same proportion in this region. In the region northeast of F, there are decreasing returns to scale. Proportional increases in both inputs yield less than proportional increases in output.
Slide 16Copyright © 2004 McGraw-Hill Ryerson Limited PROBLEM 4
Slide 17Copyright © 2004 McGraw-Hill Ryerson Limited PROBLEM 5
Slide 18Copyright © 2004 McGraw-Hill Ryerson Limited PROBLEM 10
Slide 19Copyright © 2004 McGraw-Hill Ryerson Limited ANSWER 9-1
Slide 20Copyright © 2004 McGraw-Hill Ryerson Limited ANSWER 9-4
Chapter 7. PRODUCTION McGraw-Hill/IrwinCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7.
Chapter 1 Production. Outline. The input-output relationship: the production function Production in the short term Production in the long term.
Production. Chapter Outline ©2015 McGraw-Hill Education. All Rights Reserved. 2 The Input-Output Relationship of The Production Function Production In.
Chapter 9 Production. Chapter Outline The Production Function Production In The Short Run Production In The Long Run Returns To Scale 9-2.
1 Production APEC 3001 Summer 2007 Readings: Chapter 9 &Appendix in Frank.
Production Chapter 9. Production Defined as any activity that creates present or future utility The chapter describes the production possibilities available.
PPA 723: Managerial Economics Lecture 10: Production.
1 Chapter 7 Technology and Production 1. 2 Production Technologies Firms produce products or services, outputs they can sell profitably A firm’s production.
Slide 1Copyright © 2004 McGraw-Hill Ryerson Limited Chapter 10 Costs.
Chapter 6: Production 1 of 24 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Microeconomics Pindyck/Rubinfeld, 7e. PRODUCTION.
Theory of the Firm Theory of the Firm: How a firm makes cost-minimizing production decisions; how its costs vary with output. Chapter 6: Production: How.
Part 4 © 2006 Thomson Learning/South-Western Production, Costs, and Supply.
Chapter 9:Production Chapter Outline The Production Function Production In The Short Run Production In The Long Run Returns To Scale Objective of the Firm.
Chapter 6 Production. ©2005 Pearson Education, Inc. Chapter 62 Topics to be Discussed The Technology of Production Production with One Variable Input.
Theory of the Firm 1) How a firm makes cost- minimizing production decisions. 2) How its costs vary with output. Chapter 6: Production: How to combine.
Production Chapter 6 1. Production The theory of the firm describes how a firm makes cost-minimizing production decisions and how the firm’s resulting.
Chapter 7 Technology and Production McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Outline of presentation (9/23/2010) Production Factors of production Production function Production graph – shifts Characteristics of production function.
Chapter 5 Production. Chapter 6Slide 2 Introduction Focus is the supply side. The theory of the firm will address: How a firm makes cost-minimizing production.
Chapter 6 PRODUCTION. CHAPTER 6 OUTLINE 6.1The Technology of Production 6.2Production with One Variable Input (Labor) 6.3Production with Two Variable.
Production 6 C H A P T E R. Chapter 6: Production 2 of 24 CHAPTER 6 OUTLINE 6.1The Technology of Production 6.2Production with One Variable Input (Labor)
Chapter 7 Technology and Production Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written.
1 Production In this section we want to explore ideas about production of output from using inputs. We will do so in both a short run context and in a.
Chapter 6 Production. Chapter 6Slide 2 Topics to be Discussed The Technology of Production Isoquants Production with One Variable Input (Labor) Production.
Fernando & Yvonn Quijano Prepared by: Production 6 C H A P T E R Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Microeconomics Pindyck/Rubinfeld,
Production ECO61 Microeconomic Analysis Udayan Roy Fall 2008.
Lecture 6 Producer Theory Theory of Firm. The main objective of firm is to maximize profit Firms engage in production process. To maximize profit firms.
Chapter 6 Production. The Production Function A production function tells us the maximum output a firm can produce (in a given period) given available.
Chapter 6 Production. Chapter 6Slide 2 The Technology of Production The Production Process Combining inputs or factors of production to achieve an output.
Copyright (c) 2000 by Harcourt, Inc. All rights reserved. Production Functions Let q represent output, K represent capital use, L represent labor, and.
All Rights ReservedMicroeconomics © Oxford University Press Malaysia, – 1 Theory of Production 6 CHAPTER.
Chapter 18 Technology First understand the technology constraint of a firm. Later we will talk about constraints imposed by consumers and firm’s competitors.
PRODUCTION AND ESTIMATION CHAPTER # 4. Introduction Production is the name given to that transformation of factors into goods. Production refers to.
ISOQUANT: An isoquant shows different combinations of two factors of production L & K that yield the same amount of output Q. Isoquants are level curves.
Managerial Economics Production Theory and Estimation.
Slide -- 1 Production Analysis ·Production is an activity where resources are altered or changed and there is an increase in the ability of these resources.
Slide 1Copyright © 2004 McGraw-Hill Ryerson Limited Chapter 16 General Equilibrium and Market Efficiency.
1 Inputs and Production Functions Chapter 6. 2 Chapter Six Overview 1.Motivation 2.The Production Function Marginal and Average Products Isoquants.
9-1 Learning Objectives Graph a typical production isoquant and discuss the properties of isoquants Construct isocost curves Use optimization theory.
PRODUCTION AND COSTS: THE SHORT RUN. Production An entrepreneur must put together resources -- land, labour, capital -- and produce a product people will.
1 Chapter 6: Firms and Production Firms’ goal is to maximize their profit. Profit function: π= R – C = P*Q – C(Q) where R is revenue, C is cost, P is price,
CDAE Class 17 Oct. 23 Last class: Result of the midterm exam 5. Production functions Today: 5. Production functions Next class: 5.Production functions.
Chapter 5 Production. © 2014 Pearson Education, Inc. All rights reserved.5-2 Table of Contents 5.1 Production Functions 5.2 Short-Run Production 5.3 Long-Run.
PowerPoint Slides by Robert F. BrookerHarcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Managerial Economics in a Global Economy.
Managerial Economics-Charles W. Upton Properties of Production Functions.
© 2017 SlidePlayer.com Inc. All rights reserved.