Relier Pairs ECON 315- SI Version en ligne Activity trail par Vy Do 1 It’s possible for a firm’s output to be produced with the use of only 1 input 2 MPK * Price of Output 3 keep on using additional units of an input as long as the added benefit is at least as large as the added cost 4 A firm incrementally increases its use of one input and the addition to output decreases 5 A firm increases its use of 1 unit incrementally and the addition to output increases 6 IF MPL/w > MPK/r 7 Q/L 8 Q= 5K + 3L 9 Q= 10L^0.3K^0.5 10 the labor and capital can be substituted for each other, within limit 11 Q = min{ 5K, 3L} 12 the labor and capital cannot be substituted for each other COBB-Douglas Optimal input rule APL An example of Leontieff Increasing Marginal Returns VMPK linear production function Leontieff function An example of Linear Production Function Law of Diminishing Marginal Returns use more LABOR An example of COBB-DOUGLAS
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