文档介绍：Chapter Thirty
Production
Exchange Economies (revisited)
No production, only endowments, so no description of how resources are converted to consumables.
General equilibrium: all markets clear simultaneously.
1st and 2nd Fundamental Theorems of Welfare Economics.
Now Add Production ...
Add input markets, output markets, describe firms’ technologies, the distributions of firms’ outputs and profits …
Now Add Production ...
Add input markets, output markets, describe firms’ technologies, the distributions of firms’ outputs and profits … That’s not easy!
Robinson Crusoe’s Economy
One agent, RC.
Endowed with a fixed quantity of one resource -- 24 hours.
Use time for labor (production) or leisure (consumption).
Labor time = L. Leisure time = 24 - L.
What will RC choose?
Robinson Crusoe’s Technology
Technology: Labor produces output (coconuts) according to a concave production function.
Robinson Crusoe’s Technology
Production function
Labor (hours)
Coconuts
24
0
Robinson Crusoe’s Technology
Labor (hours)
Coconuts
Production function
24
0
Feasible production plans
Robinson Crusoe’s Preferences
RC’s preferences:
coconut is a good
leisure is a good
Robinson Crusoe’s Preferences
Leisure (hours)
Coconuts
More preferred
24
0