This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: (b) convex - averages produce more than extremes 6. Marginal product (a) MP 1 is how much extra output you get from increasing the input of good 1, holding good 2 Fxed (b) MP 1 = ∂f ( x 1 ,x 2 ) /∂x 1 7. Technical rate of substitution 1 (a) like the marginal rate of substitution (b) given by the ratio of marginal products (c) TRS = dx 2 dx 1 =-∂f/x 1 ∂f/x 2 8. Diminishing marginal product (a) more and more of a single input produces more output, but at a decreasing rate (see Fgure 18.5. in the textbook) (b) law of diminishing returns 9. Diminishing technical rate of substitution (a) equivalent to convexity (b) note di±erence between diminishing MP and diminishing TRS 10. Long run and short run (a) all factors varied -long run (b) some factors Fxed -short run 11. Returns to scale (a) constant returns - baseline case (b) increasing returns (c) decreasing returns 2...
View Full Document
- Summer '10
- Economics, Economics of production, diminishing marginal product, technological constraints