If the production function has strictly isoquants and is differentiable, then there will always be an...

If the production function has strictly isoquants and is differentiable, then there will always be an interior solution to the cost- minimization problem: productuon will use both point. Assume there are isocost curves.

Justify the above statement by providing reasons.

Expert Solution

A production function refers to the maximum output that can be achieved with combination of given inputs.An isoquant describes all possible compination of inputs to produce maximum level of desired output.. It is also called as Equal Product Curve.

While an indifference curve mapping helps to solve the utility-maximizing problem of consumers, the isoquant mapping deals with the cost-minimization problem of producers.

Isoquants show all values of inputs for which output is constant.if the distance between those isoquants increases as output increases, it exhibits decreasing firms production function. if the distance is decreasing as output increases, the firm experiences increasing returns which doubles inputs results.

Rahul Sunny answered 1 year ago

assume that a firm has convex isoquants, and its production function exhibits decreasing returns to scale...

assume that a firm has convex isoquants, and its production function exhibits decreasing returns to scale (DRS). (10 pts) Draw an isoquant-isocost graph for two levels of output (q1=10 and q2=20) for this firm. Denote your cost-minimizing choices of capital and labor as (L1*, K1*) for output q1 and (L2*, K2*) for output q2. Use TC1 and TC2 to denote the total cost of each respective output level. (5 pts) How does your graph illustrate DRS? Explain. (5 pts) Using...

Firms usually have isoquants that are strictly convex. This is because of a. the limited supply...

Firms usually have isoquants that are strictly convex. This is because of a. the limited supply of an input. b. decreasing returns to scale. c. the law of diminishing returns. d. the law of diminishing marginal rates of technical substitution

The set of tangencies between isoquants and isocosts is the firm's: a. production function. b. expansion...

The set of tangencies between isoquants and isocosts is the firm's: a. production function. b. expansion path. c. output maximization curve. d. returns to scale

Consider the following statements: (I) A continuous functions is always differentiable. (II) The absolute value function...

Consider the following statements: (I) A continuous functions is always differentiable. (II) The absolute value function is differentiable everywhere. (III) If f(x) is differentiable everywhere, with f(−1) < 0, and f(2) > 0, then the equation f(x) = 0 must have a solution in the open interval (−1, 2). Which of the following is true? (a) Only (II) is always true. (b) Only (I) and (III) are always true. (c) Only (II) and (III) are always true. (d) Only (III)...

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At what point is the function f(x)= |3-x| not differentiable.

Isoquants usually slope downward (from left to right) because: Select one: a. marginal products are always...

Isoquants usually slope downward (from left to right) because: Select one: a. marginal products are always positive. b. average products are usually less than marginal products. c. marginal products are usually positive. d. marginal products will eventually decrease.

Let f be a continuous function on [a, b] which is differentiable on (a,b). Then f...

Let f be a continuous function on [a, b] which is differentiable on (a,b). Then f is non-decreasing on [a,b] if and only if f′(x) ≥ 0 for all x ∈ (a,b), while if f is non-increasing on [a,b] if and only if f′(x) ≤ 0 for all x ∈ (a, b). can you please prove this theorem? thank you!

Explain in terms of tangent lines what it means for a function (x) to be differentiable...

Explain in terms of tangent lines what it means for a function (x) to be differentiable at a point x=c

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If the production function has strictly isoquants and is differentiable, then there will always be an...

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Related Solutions

assume that a firm has convex isoquants, and its production function exhibits decreasing returns to scale...

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