New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Ch 6 Production

by: Natalie Strawn
Natalie Strawn
GPA 3.66

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes cover production and labor theories, examples, and formulas.
John Thompson
Class Notes
production, Labor, formulas, Economics, Microeconomics, theories
25 ?





Popular in Economcs

This 2 page Class Notes was uploaded by Natalie Strawn on Monday June 13, 2016. The Class Notes belongs to ECO 420K at 1 MDSS-SGSLM-Langley AFB Advanced Education in General Dentistry 12 Months taught by John Thompson in Summer 2016. Since its upload, it has received 12 views. For similar materials see MICROECONOMIC THEORY in Economcs at 1 MDSS-SGSLM-Langley AFB Advanced Education in General Dentistry 12 Months.


Reviews for Ch 6 Production


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 06/13/16
June 9, 2016 Chapter 6 – Production Producers pay attention to (a) Production technology – a production function (b) Cost and spending constraints – a cost function (c) input choices A production function describes the greatest output a firm can obtain from any combination of inputs: Q = f(K,L,M…) K= physical capital (dollar investment) L= labor M=materials Economic Time Horizon -The short run is a period of time short enough that at least one input is fixed. (We are constrained by our least variable input.) -The long run is a period of time long enough that all inputs can be varied. Short run production -For a two input production function q = f(K,L) we think of K as being least variable, so K is fixed and L is variable. -total product of labor TPl = q = f(L) -average product of labor APl = q/L -marginal product of labor MPl = dq/dL (See figure 6.1) *on exam last spring* -The law of diminishing returns states that with one fixed input, the marginal product of your variable input will eventually decline. -An increase in technology would lead to greater output for a given level of inputs. (more output, same input) Long run production -In the long run, all inputs are variable. -Consider the Cobb-Douglas production function: q = AK^(a)L^(B) *alpha and beta* -q is output, K and L are inputs, and A is “technology” -in this context, human capital would be in the category of technology -the bigger alpha or beta, the bigger output -An isoquant shows all the combinations of K and L that yield the same level of output. (Figure 6.4) -Isoquants are curved in the case of diminishing marginal returns to K and L. -The marginal rate of technical substitution (MRTS) tells you the rate at which K and L can be substituted in order to hold output constant. MRTS = -(deltaK/deltaL) (figure 6.5) -Two extreme cases arise when inputs are: (figure 6.6 and 6.7) (1) perfect substitutes (or) (2) must be used in fixed proportions Production functions: a) Convex q = AK^(a)L^(b) ex. q = 20K^(1/2)L^(1/2) b) Perfect substitutes q =AK + BL ex. q = 80K + 5L c) Fixed proportions q = A X min {AK,BL} ex. q = 200 X min{K,L} -Returns to scale describes the rate at which output increases when all inputs are increased proportionally. Three possibilities: 1) Increasing returns to scale (IRTS) 2) Constant returns to scale (CRTS) 3) Decreasing returns to scale (DRTS)


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Kyle Maynard Purdue

"When you're taking detailed notes and trying to help everyone else out in the class, it really helps you learn and understand the I made $280 on my first study guide!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.