ECO200Y1 Lecture Notes - Lecture 9: Diminishing Returns, Top Hat, Isoquant
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Less labour and more capital in order to stay in the same production output, hence the ratio will increase. When i increase output, i need to increase cost my more. A has increasing returns to scale k^1. 2i^0. 8. K^0. 8i^0. 2constant return to scale because the sum is larger than 1 (when talking about cobb doublas) If mc = p at two points, always choose q2. Q1 you can produce more, i"m getting more for it than it costs me (so increase output until i get to q2)
