7_Production2varinputs

7_Production2varinputs - Read the book! PRODUCTION (WITH 2...

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Read the book! PRODUCTION (WITH 2 VARIABLE INPUTS) Pindyck & Rubinfeld 6.3, 6.4
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roduction with two variable inputs: oquants LABOR INPUT Production with two variable inputs: Isoquants TABLE 6.4 Production with Two Variable Inputs Capital Input 1 2 3 4 5 12 0 4 0 5 5 6 5 7 5 0 0 5 5 0 2 40 60 75 85 90 3 55 75 90 100 105 4 65 85 100 110 115 5 0 05 15 20 5 75 90 105 120 isoquant Curve showing all possible combinations of inputs at yield the same output that yield the same output. Note: downward sloping! Why?
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Isoquant map isoquant map a set of isoquants for the same production function Output increases as we move from isoquant q to isoquant q 1 2 to isoquant q 3 .
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Movement across isoquants Hold K fixed and allow L to . Each additional unit of labor enerates aller additional output generates smaller additional output. Diminishing Marginal Returns to a Factor … is back!
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ade- ffs Trade offs When you move from A to B, you gain something and lose something.
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This note was uploaded on 07/30/2011 for the course ECO 112 taught by Professor Man during the Spring '11 term at HKU.

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7_Production2varinputs - Read the book! PRODUCTION (WITH 2...

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