国外厂商理论讲稿英文(ppt 24页)

States the relationship between inputs and outputs.
Inputs – the factors of production classified as:
Land – all natural resources of the earth – not just ‘terra firma’!
Price paid to acquire land = Rent
Labour – all physical and mental human effort involved in production.
Price paid to labour = Wages
Capital – buildings, machinery and equipment not used for its own sake but for the contribution it makes to production.
Price paid for capital = Interest
In the short run at least one factor fixed in supply but all other factors capable of being changed.
Reflects ways in which firms respond to changes in output (demand).
Can increase or decrease output using more or less of some factors but some likely to be easier to change than others.
Increase in total capacity only possible in the long run
The long run is defined as the period of time taken to vary all factors of production.
By doing this, the firm is able to increase its total capacity – not just short term capacity
Associated with a change in the scale of production
The period of time varies according to the firm and the industry.
In electricity supply, the time taken to build new capacity could be many years; for a market stall holder, the ‘long run’ could be as little as a few weeks or months!

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