A firm produces \(Q\) using inputs \(X\).
\(Q=f(X_1,...,X_n)\)
This is the marginal utility, adapted for the production setting.
\(MP=\dfrac{\delta }{\delta x_1}f(\mathbf x)\)
This says that marginal returns decrease as the use of a factor increases.
\(\dfrac{\delta^2 }{{\delta x_1}^2}f(\mathbf x)<0\)
Isoquants are indifference curves for firms.
We have a production function: \(Q=f(X)\).
An isoquant is defined for each \(c\) \(f(X)=c\), where \(X\) is a vector.
This is the marginal rate of substitution, adapted for firms.
\(MRTS=\)
Isoquants are indifference curves for firms.
We have a production function: \(Q=f(X)\).
An isoquant is defined for each \(c\) \(f(X)=c\), where \(X\) is a vector.
This is the marginal rate of substitution, adapted for firms.
\(MRTS=\)
\(Q=A\sum_i X_i^{\alpha_i}\)
\(Q=\sum_i X_i^{\alpha_i}\)
For some constant \(r\).
\(Q=A[\alpha_i X_i^r]^{\dfrac{1}{r}}\)
A firm produces \(Q\) using inputs \(X\).
\(Q=f(X_1,...,X_n)\)
This is the marginal utility, adapted for the production setting.
\(MP=\dfrac{\delta }{\delta x_1}f(\mathbf x)\)
This says that marginal returns decrease as the use of a factor increases.
\(\dfrac{\delta^2 }{{\delta x_1}^2}f(\mathbf x)<0\)