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Chapter 8

# ECON 101 Chapter Notes - Chapter 8: Marginal Product, Diminishing Returns, Root Mean Square

Department
Economics
Course Code
ECON 101
Professor
Robert Gateman
Chapter
8

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MicroEconomcis Review Guide - Cup 8A
Chapter 8A: Isoquant Analysis
i. ISOQUANTS
i. Isoquant curves
i. same output
ii. various combination of inputs
iii. do not across each other
iv. similar to indifference curves
v. downward sloping
vi. convex to the origin
vii. An isoquant describes the ﬁrm’s alternative method for producing a
given level of output.
ii. Substitution
i. move along the isoquant curve - substituting one factor for another
ii. The marginal rate of (technical) substitution measures the rate at
which one factor is substituted for another with output being held
constant.
iii. marginal rate of substitution is measured by the slope of the isoquant
at one certain point.
iv. marginal rate of substitution is also equal to ratio of marginal products
between these two goods.
i. The marginal rate of (technical) substitution between two
factors of production is equal to the ratio of their marginal
products
iii. Downward sloping indicates that the inputs are both having positive marginal
products. when input increases or decreases, the output would increase or
decrease as well.
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