MGCR 293 Chapter Notes - Chapter 5: Isoquant, Root Mean Square, Isocost
19 Sep 2017
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Document Summary
Ef ciency requires an understanding of the production process: scare ressources input, good and services output. The production function speci es the relationship between inputs and outputs. Production involves all activities associated with providing good and services (product distribution, acquisition of resources. ) Control of costs + understanding of demand = requires to optimize pro t. The production function shows the maximum product of output achieved with any speci ed set of inputs. A process that used two outputs: q (output rate) = f(x1, x2) The simplest case has one inputs whose quantity is xed and one whose quantity is variable. Fixed costs cannot be change in the short run. Variable costs can be change in the short run. *nb: in the long run, all inputs are variable. Relationship between total output and amount of labor used. Total labor increases as labor increases at an increasing rate & decreasing at a decreasing rate.
