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# EC4004 2008 Lecture 9 Production

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### Transcript

• 1. EC4004 Lecture 9 Production Dr Stephen Kinsella
• 2. Last Time
• 3. Game Theory
• 4. {Players, Strategies, Payoffs} Nash Eqm, Subgame Perf . Eqm Backward Induction Prisoner’s Dilemma Matching Pennies Battle of Sexes
• 5. Production.
• 6. ?
• 7. Production Function
• 8. production function, a mathematical relationship between inputs and outputs.
• 9. Combine Capital
• 10. Combine Capital
• 11. Combine Capital
• 12. Combine Capital and Labour
• 13. Combine Capital and Labour to produce output
• 14. q :output of a particular good during a period, K: capital used L: labour input M: raw materials
• 15. Marginal Products
• 16. Diminishing Marginal Product
• 17. Relationship between Output and Labour Inputs Holding Other Inputs Constant Output Total per week Output (a) Total output L* Labor input MPL per week L* (b) Marginal product Labor input per week
• 18. Isoquant Maps
• 19. Capital per week KA A KB B q = 10 Labour 0 LA LB per week
• 20. Capital per week KA A q = 30 q = 20 KB B q = 10 Labour 0 LA LB per week
• 21. Rate of Technical Substitution
• 22. The RTS and Marginal Products
• 23. Demo
• 24. Remember: Diminishing Marginal Utility, Indifference Curves, Marginal Rate of Substitution
• 25. Constant Returns to Scale
• 26. A Capital per week 4 q = 40 3 q = 30 2 q = 20 1 q = 10 0 1 2 3 4 Labor per week (a) Constant Returns to Scale
• 27. Decreasing Returns to Scale
• 28. A Capital A Capital per week per week 4 4 q = 40 3 3 q = 30 q = 30 2 2 q = 20 q = 20 1 1 q = 10 q = 10 Labor Labor 0 1 2 3 4 per week 0 1 2 3 4 per week (a) Constant Returns to Scale (b) Decreasing Returns to Scale
• 29. Increasing Returns to Scale
• 30. Capital per week A K2 q2 K1 q1 K0 q0 Labor 0 L0 L1 L2 per week
• 31. Technical Change Capital per week K1 K0 A q0 q’0 Labor 0 L1 L0 per week
• 32. Next Time Costs Do 7.1, 7.2, 7.7 Read Chapter 8
• 33. EC4004 Lecture 9 Production Dr Stephen Kinsella