Title: Microeconomics / Q2 / Mod1: production part1

Q: Production Possibilities Set
A: set of all feasible combinations of outputs and inputs:

Q: Input Requirements Set
A: All combinations of inputs capable of producing a combination of output:

Q: Isoquant
A: All combinations of the least amount of inputs required to produce a combination of output: ISQ(q) = {z ∈ IRS(q): for all z ≥ z’ and z’ ≠ z, z’ ∉ IRS(q)}.

Q: Feasible Output Set
A: All combinations of outputs that can be produced from a given combination of inputs FOS(z) = {q ∈ R : (q, -z) ∈ PPS}.

Q: Production Possibilities Frontier
A: All combinations of the most possible output obtainable from an input combination: PPF(z) = {q ∈ FOS(z): for all q’ ≥ q and q’ ≠ q, q’ ∉ FOS(z)}.

Q: Technically Efficient
A: production vector is technically efficient if there is no way to produce more output with the same amount of inputs and no way to use fewer inputs to produce the same amount of output:

Q: Transformation Function
A: A real valued function where T(y) = 0 if and only if y is Technically efficient.

Q: Input distance function
A: homogeneous of degree one in inputs: Di(𝐪, 𝜇𝐳) = 𝜇Di(𝐪, 𝐳) for any 𝜇> 0.

Q: output distance function
A: homogeneous of degree one in outputs: Do(𝜇𝐪, 𝐳) = 𝜇𝐷o(𝐪, 𝐳) for any 𝜇 > 0.