1 / 7

Microeconomics Corso E

Microeconomics Corso E. John Hey. Chapter 14. Production possibility frontiers. Case 1: linear technology ... two people. Case 2: non-linear technology ... two firms and two inputs. Case 1. Two individuals A and B. Two goods 1 and 2.

kcesar
Download Presentation

Microeconomics Corso E

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MicroeconomicsCorso E John Hey

  2. Chapter 14 • Production possibility frontiers. • Case 1: linear technology ... two people. • Case 2: non-linear technology ... two firms and two inputs.

  3. Case 1 • Two individuals A and B. Two goods 1 and 2. • Individual A can produce 120 units of good 1 or 60 units of good 2 ... or any linear combination, for example 60 of good 1 and 30 of good 2. • Individual B can produce 20 units of good 1 or 40 units of good 2 ... or any linear combination, for example 10 of good 1 and 20 of good 2. • Let’s go to Maple.

  4. Case 2 • Two firms A and B. Two produced goods 1 e 2. Two inputs 1 and 2. • Firm A has Cobb-Douglas technology with parameters a=0.63 and b=0.27. • Firm B has Cobb-Douglas technology with parameters a=0.54 and b=0.36. • The quantities of the two inputs in society are100 and 100. • Society has to allocate the inputs to the two firms. • Let’s go to Maple.

  5. Chapter 14 Summary • In a linear society the production possibility frontier is concave. • In a non-linear society with decreasing returns to scale the production possibility frontier is concave.

  6. Capitolo 14 • Goodbye!

More Related