EC270 Chapter Notes - Chapter 9: Marginal Product, Isoquant, Production Function
Document Summary
This function shows the maximum amount of the good that can be produced using alternative combinations of capital (k) and labour (l) Marginal physical product of an input is the additional output that can be produced by employing one more unit of that input while holding all other inputs constant. These definitions use partial derivatives to show that everything else is held constant. The assumption of diminishing marginal physical productivity is an assumption about the second-order partial derivatives of the production function. Changes in the marginal productivity of labour over time depends not only on how labor input is growing, but also on changes in other inputs, such as capital. In most cases, (cid:3039)(cid:3038)>0, so declining labour productivity as both l and k increases is not a forgone. The term labour productivity often means average productivity. Isoquant maps and the rate of technical substitution.
