9Lecture

9Lecture - Output elasticity: measuring how consumers...

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Lecture 9 13:16 Production Theory Production function Marginal product How much input  do you need to max profits and min costs Budget line Iso cost and iso quant Marginal product of each variable = marginal product of the capital to price of cap MP L /P L  = MP K /P K IRTS If firm doubles inputs outputs should more than double DRTS  Decreasing returns CRTS Constant returns – if you double inputs then outputs will exactly double
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Unformatted text preview: Output elasticity: measuring how consumers respond to change in input variables, percentage change in output in result of 1% change in all intputs (labor, capital) % change output / % chane all inputs Nq > 1 = IRTC Nq < 1 = DRTS Nq = 1 = CRTS Cobb- Douglas Production Function: Q = AK^L^ 13:16 13:16...
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This note was uploaded on 02/23/2012 for the course 373 421 taught by Professor Sani during the Spring '12 term at Rutgers.

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9Lecture - Output elasticity: measuring how consumers...

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