Abstract
The fundamental concept related to the supply side of an economy is the production function. A production function relates the maximum quantity of output that can be produced from given quantities of inputs.
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Notes
- 1.
Later in the chapter we adopt \(w\) as the wage rate and \(r\) as the rental cost of a unit of capital.
- 2.
Durand, D. (1937). Some thoughts on marginal productivity, with special reference to professor Douglas’ analysis. The Journal of Political Economy, 45(6), 740–758.
- 3.
Ibid.
- 4.
Readers should be aware of the difference between “innovation” and “invention” pertaining to production processes.
- 5.
A slightly fancier term than total variable cost \(TVC\).
- 6.
Commonly L or script L (\(\mathcal {L}\)) is used for the Lagrangian function. Since we use L for labor it is denoted here by \(Y\).
- 7.
By building more facilities or through merger and acquisition.
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Vali, S. (2014). Production Function, Least-Cost Combination of Resources, and Profit Maximizing Level of Output. In: Principles of Mathematical Economics. Mathematics Textbooks for Science and Engineering, vol 3. Atlantis Press, Paris. https://doi.org/10.2991/978-94-6239-036-2_10
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DOI: https://doi.org/10.2991/978-94-6239-036-2_10
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