ECON 2005 Lecture Notes - Lecture 15: Marginal Cost, Marginal Product, Production Function
Document Summary
Capital all physical equipment ex: machines & buildings. Entrepreneurial skill ability to pull all inputs together. Capital- intensive technology relies heavily on capital ex machines. Question: firms with a high labor cost have an incentive to. Many ways to produce the same level of output using diff. combinations of capital. Ex: auto spa, or get it washed by a bunch of 14 year olds, but either way your car is getting washed. Ex: produce 100,000 textbooks; 1 computerized press 1 operator, or 100 manual presses, 1 operators. Job of engineer is to provide these options to management. To determine the cost of production: profit-maximizing firms will choose technology that minimizes the production giver current market input prices. Assume firms always find the lowest cost of production/cost-efficient production method. Short run cots of producing a certain quantity means the minimum possible short run cost . Capital (machines) and labor (human labor) usually complements.
