Intermediate Microeconomics Module 5 - Custom Scholars
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# Intermediate Microeconomics Module 5

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Technology
Is a process by which inputs are converted to an output
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Input Bundle
A vector of the input levels

(x1, x2, ... , xn). X(I) denotes the amount used of input i
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The technology's production function
States the maximum amount of output possible from an input bundle

Y = f(x(1), x(2),....., x(n)

Y denotes the output level
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Production Plan
Is an input bundle and an output level
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The y output unit isoquant is......
Is the set of all input bundles that yield at most the same output level y
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Cobb-Douglass Production Function
Y = Ax(1)^a x(2)^b

Q=f(k,L)
Quantity is a function of (capital, labor) (output)
The maximum amount of output that can be produced with K units of capital and L units of labor
question
Fixed-Proportions Production Function
Y = min(a(1)x(1), a(2)x(2))

Production function with L-shaped isoquants, so that only one combination of labor and capital can be used to produce each level of output.
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The Marginal Product of Labor (i)
Is the rate or change of the output level as the level of input i changes, holding all other input levels of fixed
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The Marginal Product of input i is diminishing if it.....
Becomes smaller as the level of input i increases
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If, for any input bundle the value is greater than 1..........
Then the technology described by the production function f exhibits increasing returns to scale
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If, for any input bundle the value is less than 1..........
Then the technology described by the production function f exhibits diminishing returns to scale
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If, for any input bundle the value is equal to 1..........
Then the technology described by the production function f exhibits constant returns to scale
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The perfect substitutes production function is.........
y = a1x1 + a2x2
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Both the perfect substitutes and the fixed proportion production functions exhibit........
Constant returns to scale
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Perfect Substitutes
Y = x1 + x2
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Technical Rate of Substitution
the rate at which a firm will have to substitute one input for another in order to keep output constant
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Returns to scale
rate at which output increases as inputs are increased proportionately
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question
Technology
Is a process by which inputs are converted to an output
question
Input Bundle
A vector of the input levels

(x1, x2, ... , xn). X(I) denotes the amount used of input i
question
The technology's production function
States the maximum amount of output possible from an input bundle

Y = f(x(1), x(2),....., x(n)

Y denotes the output level
question
Production Plan
Is an input bundle and an output level
question
The y output unit isoquant is......
Is the set of all input bundles that yield at most the same output level y
question
Cobb-Douglass Production Function
Y = Ax(1)^a x(2)^b

Q=f(k,L)
Quantity is a function of (capital, labor) (output)
The maximum amount of output that can be produced with K units of capital and L units of labor
question
Fixed-Proportions Production Function
Y = min(a(1)x(1), a(2)x(2))

Production function with L-shaped isoquants, so that only one combination of labor and capital can be used to produce each level of output.
question
The Marginal Product of Labor (i)
Is the rate or change of the output level as the level of input i changes, holding all other input levels of fixed
question
The Marginal Product of input i is diminishing if it.....
Becomes smaller as the level of input i increases
question
If, for any input bundle the value is greater than 1..........
Then the technology described by the production function f exhibits increasing returns to scale
question
If, for any input bundle the value is less than 1..........
Then the technology described by the production function f exhibits diminishing returns to scale
question
If, for any input bundle the value is equal to 1..........
Then the technology described by the production function f exhibits constant returns to scale
question
The perfect substitutes production function is.........
y = a1x1 + a2x2
question
Both the perfect substitutes and the fixed proportion production functions exhibit........
Constant returns to scale
question
Perfect Substitutes
Y = x1 + x2
question
Technical Rate of Substitution
the rate at which a firm will have to substitute one input for another in order to keep output constant
question
Returns to scale
rate at which output increases as inputs are increased proportionately

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