Technology sets One input, one output Output Level y The technology set y X X Input Level
Technology Sets x’ x Input Level Output Level y’ One input, one output y” The technology set
Technology sets One input, one output Output Level Technically y efficient plans The technology set y Technically inefficient plans X X Input Level
Technology Sets x’ x Input Level Output Level y’ One input, one output y” The technology set Technically inefficient plans Technically efficient plans
Technologies with Multiple inputs o What does a technology look like when there is more than one input? The two input case: Input levels are X, and x2. Output level is y Suppose the production function is y=f(x1,x2)=2x1/31/3 2
Technologies with Multiple Inputs ◆What does a technology look like when there is more than one input? ◆The two input case: Input levels are x1 and x2 . Output level is y. ◆Suppose the production function is y = f(x ,x ) = x x . 1 2 1 1/3 2 1/3 2
Technologies with Multiple inputs +E.g. the maximal output level possible from the input bundle (X1,x2)=(1,8)is y=2x13×x23=2×13x×813=2×1×2=4 e And the maximal output level possible from (x,, x2=(8, 8)is y=2X1X 22°=2×81/3x8l/3 1/3.1/3 =2×2×2=8
Technologies with Multiple Inputs ◆E.g. the maximal output level possible from the input bundle (x1 , x2 ) = (1, 8) is ◆And the maximal output level possible from (x1 ,x2 ) = (8,8) is y = 2x1 x = 2 1 8 = 2 1 2 = 4 1/3 2 1/3 1/3 1/3 . y = 2x1 x = 2 8 8 = 2 2 2 = 8 1/3 2 1/3 1/3 1/3
Technologies with Multiple inputs An isoquant(等产量线) is the set of all possible combinations of inputs 1 and 2 that are just sufficient to produce a given amount of output
Technologies with Multiple Inputs ◆An isoquant (等产量线) is the set of all possible combinations of inputs 1 and 2 that are just sufficient to produce a given amount of output