中微课件范里安版MicroCh18章节幻灯片.pptVIP

Returns-to-Scale y = f(x) x Input Level Output Level One input, one output Decreasingreturns-to-scale Increasingreturns-to-scale Examples of Returns-to-Scale The perfect-substitutes productionfunction is We have: The perfect-substitutes productionfunction exhibits constant returns-to-scale. Examples of Returns-to-Scale The perfect-complements productionfunction is We have: The perfect-complements productionfunction exhibits constant returns-to-scale. Examples of Returns-to-Scale The Cobb-Douglas production function is We have Examples of Returns-to-Scale The Cobb-Douglas production function is The Cobb-Douglas technology’s returns-to-scale isconstant if a1+ … + an = 1increasing if a1+ … + an 1decreasing if a1+ … + an 1. Comparing Returns-to-Scale with Marginal Product Q: Can a technology exhibit increasing returns-to-scale even if all of its marginal products are diminishing? A: Yes. E.g. Comparing Returns-to-Scale with Marginal Product (Cont.) so this technology exhibitsincreasing returns-to-scale. But diminishes as x1 increases and diminishes as x1 increases. Returns-to-Scale A marginal product is the rate-of-change of output as one input level increases, holding all other input levels fixed. Marginal product diminishes because the other input levels are fixed, so the increasing input’s units have each less and less of other inputs with which to work. Technical Rate-of-Substitution At what rate can a firm substitute one input for another without changing its output level? Technical Rate-of-Substitution x2 x1 yo100 The slope is the rate at which input 2 must be given up as input 1’s level is increased so as not to change the output level. The slope of an isoquant is its technical rate-of-substitution. Technical Rate-of-Substitution How is a technical rate-of-substitution computed? The production function is A small change (dx1, dx2) in the input bundle causes a change to the output level of Technical Rate-of-Substitution But dy =