Kapitel 4 Flashcards
1
Q
Production function
A
2
Q
Production functions definitions and assumptions
A
3
Q
Marginal Product
A
4
Q
Isoquants
A
- can have positively sloped regions because MRTS can be negative
5
Q
Marginal rate of technical substitution (MRTS)
A
- rate at which z2 can be reduced given a marginal increase in z1 so as to keep production constant
- steigung der isoquanten kurven
6
Q
Output efficiency vs. technical efficiency
A
- Output efficiency: no inputs are wasted, we are on the isoquant.
- Technical efficiency: it is not possible to increase output by reducing some input, fi(z) ≥ 0 for all i.
- A cost minimizing firm will always produce in a technically efficient way.
7
Q
Elasticity of substitution (σ)
A
- The elasticity of substitution captures the relationship between input ratio and the curvature of the isoquants.
- It measures the percentage change in the input mix associated with a given percentage change in MRTS.
8
Q
Returns to scale, elasticity of scale
A
- investigate the effects of changes in all inputs keeping input proportions constant
- The elasticity of scale E is the percentage change in output associated with a one percent change in the scale of production
9
Q
Homogeneous production functions
A
10
Q
linear Homogeneous production functions properties
A
- property 1: The elasticity of scale of a homogeneous function of degree t is equal to t.
- property 2: A homogeneous function of degree t has partial derivatives with respect to zi of degree t − 1.
- Property 3: Slope of isoquants depends only on input proportions and is independent of scale of production -> MRTS is not influenced by factor s
- Property 4: Euler’s theorem:
11
Q
Homothetic production functions
A
12
Q
Homothetic production functions properties
A
- Homothetic production functions share with homogeneous production functions Property 3.
- Property 3: Slope of isoquants depends only on input proportions and is independent of scale of production.
13
Q
Average product
A
