The Technology of Production a The production function for two inputs Q=F(K, L Q=Output, K=Capital, L= Labor a For a given technology Chapter 6 Slide 6
Chapter 6 Slide 6 The Technology of Production ◼ The production function for two inputs: Q = F(K,L) Q = Output, K = Capital, L = Labor ◼ For a given technology
Isoquants ■ Assumptions o Food producer has two inputs ◆ Labor(L)& Capital(K Chapter 6 Slide 7
Chapter 6 Slide 7 Isoquants ◼ Assumptions ⚫ Food producer has two inputs ◆Labor (L) & Capital (K)
Isoquants ■○ bservations 1) For any level of K, output increases with more l 2) For any level of L, output increases with more K 3)Various combinations of inputs produce the same output Chapter 6 Slide 8
Chapter 6 Slide 8 Isoquants ◼ Observations: 1) For any level of K, output increases with more L. 2) For any level of L, output increases with more K. 3) Various combinations of inputs produce the same output
Isoquants ■| soquants o Curves showing all possible combinations of inputs that yield the same output Chapter 6 Slide 9
Chapter 6 Slide 9 Isoquants ◼ Isoquants ⚫ Curves showing all possible combinations of inputs that yield the same output
Production Function for food Labor Input Capital Input 1 3 20 40 55 65 55 12345 40 60 75 85 90 55 75 90 100 105 65 85 100 110115 75 90 105 115120 Chapter 6 Slide 10
Chapter 6 Slide 10 Production Function for Food 1 20 40 55 65 75 2 40 60 75 85 90 3 55 75 90 100 105 4 65 85 100 110 115 5 75 90 105 115 120 Capital Input 1 2 3 4 5 Labor Input