Production Economics 产品经济.ppt

Production Economics GSM5000 (MANAGERIAL ECONOMICS) Normaz wana Ismail, PhD Technology Technology Changes Technology: the processes a firm uses to turn inputs into outputs of goods and services Technological change: a change in the ability of a firm to produce a given level of output with a given quantity of output The development of the first digital electronic computer – the ENIAC- occurred in 1945 The first IBM personal computer introduced in 1981 √ It was not until 1990s that widespread use of computers began to have significant effect of productivity The Technology of Production The production function for two inputs: q = F(K,L) Output (q) is a function of capital (K) and Labor (L) The production function is true for a given technology If technology increases, more output can be produced for a given level of inputs given technology, used to transform inputs into outputs INPUTS: Fixed and Variable Inputs A fixed input required in the production process but quantity employed in the process is constant over a given period of time regardless of the quantity of output produced. The costs of a fixed input must be incurred regardless of whether the production process is operated at a high or a low rate of output. A variable input quantity employed in the process changes depending on the desired quantity of output to be produced. TECHNOLOGY As technology more advanced, a firm can obtain more output for a given a set of inputs Production functions describe what is technically feasible when the firm operates efficiently when the firm uses each combination of inputs as effectively as possible The production function Related the maximum quantity of output that can be produced from given amounts of various inputs for a given technology. A change in technology, such as introduction of more automated equipment or the substitution of skilled for unskilled workers, result in a new production function. The production of most outputs (good and services) requires the use of la