Feasability
Chapter
7
The Production Process: The Behavior of Profit-Maximizing Firms
Prepared by:
Fernando & Yvonn Quijano
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
The Production Process: The Behavior of Profit-Maximizing Firms
7
Chapter Outline
The Behavior of ProfitMaximizing Firms Profits and Economic Costs Short-Run versus Long-Run Decisions The Bases of Decisions: Market Price of Outputs, Available Technology, and Input Prices The Production Process Production Functions: Total Product, Marginal Product, and Average Product Production Functions with Two Variable Factors of Production Choice of Technology Looking Ahead: Cost and Supply Appendix: Isoquants and Isocosts
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
2 of 33
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
THE PRODUCTION PROCESS: THE BEHAVIOR OF PROFIT-MAXIMIZING FIRMS
FIGURE 7.1 Firm and Household Decisions
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
3 of 33
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
THE PRODUCTION PROCESS: THE BEHAVIOR OF PROFIT-MAXIMIZING FIRMS
Although Chapters 7 through 12 describe the behavior of perfectly competitive firms, much of what we say in these chapters also applies to firms that are not perfectly competitive. For example, when we turn to monopoly in Chapter 13, we will be describing firms that are similar to competitive firms in many ways. All firms, whether competitive or not, demand inputs, engage in production, and produce outputs. All firms have an incentive to maximize profits and thus to minimize costs.
production The process by which inputs are combined, transformed, and turned into outputs.
© 2007 Prentice Hall Business Publishing Principles of Economics 8e
7
The Production Process: The Behavior of Profit-Maximizing Firms
Prepared by:
Fernando & Yvonn Quijano
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
The Production Process: The Behavior of Profit-Maximizing Firms
7
Chapter Outline
The Behavior of ProfitMaximizing Firms Profits and Economic Costs Short-Run versus Long-Run Decisions The Bases of Decisions: Market Price of Outputs, Available Technology, and Input Prices The Production Process Production Functions: Total Product, Marginal Product, and Average Product Production Functions with Two Variable Factors of Production Choice of Technology Looking Ahead: Cost and Supply Appendix: Isoquants and Isocosts
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
2 of 33
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
THE PRODUCTION PROCESS: THE BEHAVIOR OF PROFIT-MAXIMIZING FIRMS
FIGURE 7.1 Firm and Household Decisions
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
3 of 33
CHAPTER 7: The Production Process: The Behavior of Profit-Maximizing Firms
THE PRODUCTION PROCESS: THE BEHAVIOR OF PROFIT-MAXIMIZING FIRMS
Although Chapters 7 through 12 describe the behavior of perfectly competitive firms, much of what we say in these chapters also applies to firms that are not perfectly competitive. For example, when we turn to monopoly in Chapter 13, we will be describing firms that are similar to competitive firms in many ways. All firms, whether competitive or not, demand inputs, engage in production, and produce outputs. All firms have an incentive to maximize profits and thus to minimize costs.
production The process by which inputs are combined, transformed, and turned into outputs.
© 2007 Prentice Hall Business Publishing Principles of Economics 8e