ECON 2GG3 Study Guide - Final Guide: Isoquant, Hectare, Marginal Product
15 Oct 2015
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Production efficiency with homogenous factors, different production technologies economy producing food and manufactures (cid:224) both use land (t) and labour (l: both inputs homogenous every hectare of land is the same, all workers clones of each other, fixed amount of land available, fixed amount of labour (cid:224) both are supplied perfectly inelastic assume both goods are produced using cobb douglas, constant returns to scale tech, use of each input alone is characterized by diminishing marginal product (short run, isoquants (long run) for each output are radial blow ups of unit isoquant isoquant slope = along any ray from origin to generate concave ppf (cid:224) need diff in factor intensities assume food = land intensive (high land/labour ratio in production), manufacture = labour intensive (low ratio, production functions. +dl dm = dl*mpl(m: reallocate some land, change in land used in food, change in food, change in land used in man, change in man.
