1. Outline for Friday, July 25
Remember
Homework due Monday
Midterm review Monday 4:30 Rackley 105
Midterm Tuesday
Technology
Review Thursday
Graphs: TP, MP, AP
Returns to scale
Productivity and technical change

2. Production
Labor, L, and capital, K, combine to produce output, q
K cannot be changed in the short run, which ends when
K can be changed

3. Cobb-Douglas Technology
K
A B
q= L K
L

4. Fixed-Proportions Technologies
K
q = min{ aL , bK }
aL = bK
L

5. Perfect-Substitution Technologies
K
y = aL + bK
L