约克大学summer math 微观经济T6 Firm I.pdf

Inputs and Production Functions Basic concepts • A production function is a relationship between quantities of inputs used and maximum quantity of output that can be produced, given current knowledge about technology and organization. • Inputs are resources that are combined to produce finished goods. These include capital, labour and raw materials. • Output is the amount of a good produced by a firm. • A production set is a set of technically feasible combinations of inputs and outputs. Production function with two inputs A production function that uses only two inputs of production can be represented by: Q = f (L, K) where Q denotes output, L labour, K capital, and f() is a function Variability of inputs over time • It is easier for a firm to adjust its inputs in the long run (LR) rather than in the short run (SR) • Short run is a period of time such that at least one factor of production is fixed • Fixed input is a factor of production that cannot be varied in the SR (for example capital, it is impossible to build a new plant in the short time) • Variable input is a factor which can be varied during the relevant period of time • In the long run all inputs can be varied Production function • Assume here that we a looking at a firm where the capital is fixed and the Maximum point only input of production that can vary Q is labour. An example of total product (output) is plotted on the right-hand Inflection side. Not