This preview shows page 1. Sign up to view the full content.
Unformatted text preview: level set. The level set obtained
by taking a horizontal slice of the production function is called an isoquant.
Suppose that K = 16 and L = 4. According to the production function in Ex.5, output is: The above isoquant shows all the possible ways to achieve an output of 8 by combining various
amounts of capital and labour.
At some point we may be interested in marginal products. For example, suppose the producer
would like to know how much output will increase when either capital or labour increases. To
address this, we will need partial derivatives.
A partial derivative of a function with multiple variables is the derivative of the function with
respect to one of those variables, with the other variables treated as constants.
Consider the following function:
The partial derivatives of this function are: . These derivatives tell us how much z will change given a small change in x or y, holding the
other variable constant.
Just like a regular derivative, a partial derivative need not always...
View Full Document
This note was uploaded on 01/24/2013 for the course ECON 203 taught by Professor Okhan during the Spring '11 term at University of Victoria.
- Spring '11