ECON 310 Lecture 5: l310x5
Document Summary
Lecture 5 the production function and the costs of the firm: introduction. We now turn to looking at the underlying determinants of the supply curve. In the same way that the consumer maximizes utility subject to the budget constraint, the firm maximizes profits subject to its technology and the prices it faces in the market. The tools for thinking about this are the production function and the iso-cost curves. The firm takes inputs and, given its technology, uses those inputs to produce outputs. Q = f (l, k, r, b, m) One factor of production labor: production function. A simple place to start is to look at the relationship between output (q) and one factor of production (l), holding the other factors fixed at a constant level. Q = f (l; k, r, b, m) = f(l) holding other things fixed.
