Production Flashcards
(19 cards)
A Change in Quantity of Labor = ?
Change in L * MP(L)
Cobb Douglas b+c < 1
Decreasing Returns to Scale
MRTS =
- dK / dL
When MP(L) > AP(L), AP(L) is = ?
Increasing
Isoquants show ?
Constant Quantities produced
Decreasing Returns to Scale
Output increases at a slower rate than input increases
Diminishing Marginal Returns
MP(L) are decreasing
AP(L) =
Q/L
Cobb Douglas b+c>1
Increasing Returns to Scale
Long Run
All inputs are variable
A Change in Quantity of Capital = ?
Change in K * MP(K)
Short Run
Some inputs are variable
Cobb-Douglas Production function = ?
Q = a*L^b*K^c a = intercept b =
Scaling Cobb-Douglas
s^b+c * a * L^b * K^c
Increasing Returns to Scale
Output increases at a greater rate than input increases
Cobb-Douglas b+c = 1
Constant Returns to Scale
dAP(L)/dL =
(MP(L)-AP(L)) / L
When MP(L) < AP(L), AP(L) is = ?
Decreasing
MRTS L for K =
Change in K / Change in L = MP(L) / MP (K) (NEGATIVE SLOPE)
