1. Isoquants:
2.Isocost line:
3. Marginal product of labour:
It is the growth in total production that occurs when labour increases by a unit while at the same time other inputs remain the same.
4. Diminishing marginal returns:
It expresses that as one input variable is increased, there is a point at which the marginal increase in output starts to decrease holding all other inputs constant.
5.marginal rate of technical substitution:-
6.Returns to scale:
7.Differentiate between increasing decreasing and constant returns to scale:
3. Look up the following concepts in your textbook and explain in a few sentences what...
Please show all your work step by step 1. Suppose the production function is Cobb-Douglas and f(x1,22) = x122. (a) Write an expression for the marginal product of xy at the point (21,22). (b) Holding a fixed, for small increases in 31, will the marginal product of increase, decrease or remain constant? (c) What's the marginal product of factor 2? Will it increase, remain constant or decrease for small increases in x2? (d) Does an increase in the amount of...
3. For each of the following production functions, graph a typical isoquant and determine whether the marginal rate of technical substitution of labor for capital (MRTS ) is diminishing, constant, increasing, or none of these. a. Q=LK b. Q=LVK c. Q=L*K13 d. Q = 3L +K e. Q = min{3L, K} Show transcribed image text 3. For each of the following production functions, graph a typical isoquant and determine whether the marginal rate of technical substitution of labor for capital...
5. A consumer buys two goods. If the prices of both goods fall by 10% and the consumer's income falls by 20%, then a. the slope of the consumer's budget line will change. b. the consumer's budget line will shift out from the origin with the slope unchanged. c. the consumer's budget line will shift in toward the origin with the slope unchanged. d. the consumer's budget line will not change. 6. The figure at the right shows the isoquant...
16. The short run is a. less than a year. b. three years. c. a time period in which at least one input is fixed. d. a time period in which at least one set of outputs has been decided upon. According to the law of diminishing returns a. the total product of an input will eventually be negative. b. the marginal product of an input will eventually be negative.d c. the total product of an input will eventually decline....
1. Suppose the production function is Cobb-Douglas and f(11,12) = 21222 (a) Write an expression for the marginal product of 21 at the point (21,12). (b) Holding 22 fixed, for small increases in I, will the marginal product of 2 increase, decrease or remain constant? (c) What's the marginal product of factor 2? Will it increase, remain constant or decrease for small increases in ra? (d) Does an increase in the amount of 22 increase, leave unchanged or decrease the...
Question-3 (Marginal Products and Returns to Scale) (30 points) Suppose the production function is Cobb-Douglas and f(x1; x2) = x1^1/2 x2^3/2 1. Write an expression for the marginal product of x1. 2. Does marginal product of x1 increase for small increases in x1, holding x2 fixed? Explain 3. Does an increase in the amount of x2 lead to decrease in the marginal product of x1? Explain 4. What is the technical rate of substitution between x2 and x1? 5. What...
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...
2. For each of the following production functions: Q = 3L2 +6K4 Q= V25KL Q = 5V1 + 101K a. Find the marginal product of each input, i.e. MP, and MPx: b. Determine whether the production function exhibits diminishing marginal returns to each input. c. Find the marginal rate of technical substitution, MRTSLK and discuss how it changes as the firm uses more L and less K, holding output constant. d. Determine whether the production function exhibits constant, increasing or...
Suppose the production function is Cobb-Douglas and f(x1, x2) = x^1/2 x^3/2 (e) What's the technical rate of substitution TRS (11, 12)? (f) Does this technology have diminishing technical rate of substitution? (g) Does this technology demonstrate increasing, constant or decreasing returns to scale?
TUTORIAL2 Chapter 7 Part 1 Key Concepts and Equations: Production Isoquant: shows all combinations of input quantities that yield the same level of output. Higher isoquant: higher level of output Marginal Rate of Technical Substitution: MRTS is the slope of the isoquant at any input combination. It tells us the rate at which we must increase the qty of input 2 per unit decrease in qty of input 1. MRTS diminishes as we move down the isoquant from left to...