EM c6 production and cost analysis in the long run

long-run production function
a production function showing the relationship between a flow of inputs and the resulting flow of output, where all inputs are variable

Q= f(L,K)  Q: q of output. L: q of labor input(variable)
K: q of capital input (variable)

input substitution
labor-intensive method of production
a production process that uses large amounts of labor relative to the other inputs to produce the firm\'s output

capital-intensive method of production
**********capital equipment**********

input substitution
the degree to which a firm can substitute one input for another in a production process
three factors
1.the technology of the production process
2.the prices of the inputs of production
3.the set of incentives facing the given producer

the role of competitive environments
X-inefficiency
inefficiency that may result in firms with market power that have fewer incentives to minimize the costs of production than more competitive firms

best practices
the production techniques adopted by the firms with the highest levels of productivity

lean production
an approach to production pioneered by Toyota Motor corporation in which firms streamline the production process through strategies such as strict scheduling and small-batch production with low-cost flexible machine

long-run average cost(LRAC)
the minimum average or unit cost of producing any level of output when all inputs are variable

short-run average total cost(SATC)
the cost per unit of output for a firm of a given size or scale of operation