Production with Two Variable Inputs
3 years ago
Microeconomics
Isoquant – Curve showing all possible combinations of inputs that yield the same output.
Isoquant map – Graph combining a number of isoquants, used to describe a production function.
Marginal rate of technical substitution (MRTS) – Amount by which the quantity of one input can be reduced when one extra unit of another input is used, so that output remains constant.
MRTS = - Δ K / Δ L = (MPL)/(MPK) >>>> (for a fixed level of q) MP = marginal product of…
Fixed-proportions production function – Production function with L-shaped isoquants, so that only one combination of labor and capital can be used to produce each level of output.
Bijay Satyal
Dec 1, 2021