Lecture Managerial economics (8e): Chapter 5 - Samuelson, Marks

Chapter 5 - Production. We open this chapter by examining the production function, a quantitative summary of the firm’s production possibilities. Next, we look closely at production in the short run and examine the impact on output of changing a single input. Then we consider production in the long run, when the firm has the flexibility to vary the amounts of all inputs.

Managerial Economics, 8e William F. Samuelson   Stephen G. Marks ●

Chapter Five

Production

over one­third of the output. 

Increasing the number of participants  merely reduces the average output.

 ~Norman Augustine, Augustine’s Laws

Allocating a Sales Force

To a greater or lesser extent, almost all firms face the  task of finding and retaining customers for their goods.

Basic Production Concepts

Production Technology 

A Production Function for Auto Parts

Short­Run and Long­Run Production

Marginal Product The Law of Diminishing Marginal Returns Optimal Use of an Input

Example 1 Example 2

Figure 5.1

Total Product and Marginal Product

Returns to Scale

Least­Cost Production

Example 3

Winning in Football and Baseball

A Graphical Approach

Figure 5.2

Isoquants and Isocost Lines

Producing Output 

at Minimum Cost

Measuring Production Functions

Linear Production

Production with Fixed Proportions

Polynomial Functions

The Cobb­Douglas Function

Estimating Production Functions

Multiple Plants

Multiple Products

Figure 5.4

Splitting Production 

between Two Plants

Aluminum vs. Steel in

Cars and Trucks

Allocating a Sales Force—Revisited 

Figure 5.5

Profit Functions for an 

office supply firm