Isoquant curve is the locus of various combinations of two inputs labor and capital that yield the same level of output. It means every point of an isoquant curve shows an equal level of output. This short article tries to explain the concept of an isoquant curve map or isoquant map. We assume that producers …
Meaning of Iso-quant In the long-run producer can change all the factors and thus output can also be changed by all the factors of production. The level of output that can be produced by different combinations of factors (especially labor and capital) is shown by the iso-quant curve. Isoquant refers to the same quantity. An …
In economics short-run and long-run do not reflect any time period like the concept of short-term and long-term. Economists connect the word short-run as well as long-run or the concept of short-run and long-run with the ability of producers to adjust different factors of production while producing goods and services. Thus, the concept of short-run …
Concept of Optimum Employment of Input Every producer engages in the act of production to earn possible maximum profit by utilizing the available amount of total cost outlay, prices of factors of production, state of technology, governmental policy, and so on. To ensure a maximum profit or to minimize the cost of production, the selection …
There are different definitions of microeconomics given by different economists and the common matter of almost all the definitions is that microeconomics refers to the study of economic behaviors of very small and individual units of an entire economy. Thus, first microeconomics divides the entire economy into several small parts and then studies each part …
In this article, we explain the major properties of the Cobb-Douglas production function Introduction to Cobb Douglas Production Function The Cobb-Douglas production function is an empirical production function developed by Charles W. Cobb (American Mathematician) and Paul H. Douglas (American Economist) based on empirical studies of various manufacturing industries of the USA. This production function …
Major Properties of the Cobb-Douglas Production Function Read More »
Introduction The laws of returns to scale explain the input-output relationship under the condition that both the inputs (labor and capital) are variable and their quantity increases proportionately (by same size or proportion) and simultaneously. When both the inputs labor and capital are increased proportionately, the scale or volume of production also increases. So, the …
Introduction The law of variable proportion is a widely observed law of production that takes place in the short run. The law was propounded by economists like Joan Robinson, Alfred Marshall, P.A. Samuelson, etc. This law is also known as the law of diminishing returns. The law is concerned with a short-run production function. …
In this article, we have explained different factors affecting the price elasticity of demand The value of price elasticity of demand is based on so many factors and such factors are collectively called determinants of price elasticity of demand. If the magnitude of price elasticity of demand is greater than one then the demand is …
Introduction German economist H.H. Gossen developed his second law as the law of substitution or the law of equi-marginal utility/the law of maximum satisfaction in 1854 AD. This law is further developed and popularized by Prof. Alfred Marshall. According to this law, the consumer allocates her/her limited money income among various goods for getting maximum …