Chapter Outline

8.1 The Long Run: No Fixed Factors

8.2 The Very Long Run: Changes in Technology

AFTER STUDYING THIS CHAPTER YOU WILL BE ABLE TO

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 Learning Objectives (LO)

1. explain why profit maximization requires firms to equate

marginal product per dollar spent for all factors.

2. explain why profit-maximizing firms substitute away from factors

whose prices have risen and toward factors whose prices have

fallen.

3. understand the relationship between short-run and long-run cost

curves.

4. discuss the importance of technological change and why firms are

motivated to innovate.