Production Technology: Two Variable Inputs
Production Surface (or Total Product Hill):
A curve that demonstrates all of the combinations of labour and capital that can produce a given level of output.
MRTS (Marginal rate of Technical Substitution)
MRTSL,K = −ΔK/ΔL
From Q = f (L,K) , we can get the following equation by totally differentiating the production function.
ΔQ = MPL . ΔL + MPK . ΔK = 0.
Finally, we can get:
MRTSL,K = −ΔK/ΔL= MPL/MPK and d2K/dL2 > 0 implies the Law of Diminishing MRTS.
Elasticity of Substitution:
σ = (percentage change in capital - labour ratio)/(percentage change in MRTSL,K)= [(Δ(K/L)/(K/L))]/[ΔMRTS/MRTS]K/L at A = slope of ray OA = 4
MRTS at A = 4K/L at B = slope of ray OB = 1
MRTS at B = 1As the firm moves from A to B, the elasticity of substitution equals 1.
Example: Q = LK = 100 (left diagram)
Latest technology based Microeconomics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Microeconomics help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Microeconomics, project ideas and tutorials. We provide email based Microeconomics help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Microeconomics. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Microeconomics Homework help and assignment help services. They use their experience, as they have solved thousands of the Microeconomics assignments, which may help you to solve your complex issues of Microeconomics. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!