3. Use the total differential to find the MRTS for the production function y X1X2. Show...

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3. Use the total differential to find the MRTS for the production function y X1X2. Show that the isoquants are strictly conve

business economics

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Answer 1

Answer #1

3.

Ans:

We have:

To find total differential, we have:

At optimal point, change in y or dy = 0. So, we have:

After rearranging, we get:

We can see that as x1 rises or x2 falls, MRTS (slope of isoquant) falls which shows that isoquants are striclty convex to origin and look like following:

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Answer 2

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3. Use the total differential to find the MRTS for the production function y X1X2. Show...

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