What is production function? What is Cobb-Douglass production function? What is isoquant? What is a typical...

What is production function?
What is Cobb-Douglass production function?
What is isoquant?
What is a typical shape of the rate of output as a function of labor or capital?
What is the difference between marginal production and average production functions?
Define the law of diminishing marginal return?

Expert Solution

What is Production Function?

The production function shows the relation between the quantities of inputs used in the production process and the quantity of output. Production function shows the relationship between the quantity of different inputs used and the quantity of output produced from those inputs. It is the physical relationship between inputs and outputs.

What is Cobb-Douglass production function?

The Cobb-Douglass production function was presented by Charles Cobb and Paul Douglas in 1928. It shows the relationship between the inputs viz. labor and capital (Physical) and the total amount of output produced by using the inputs. According to The Cobb-Douglass production function, output is the result of total amount of labor and physical capital invested to produce the output.

What is isoquant?

Isoquant is a Graph to use to show the all inputs that produce level of output. Isoquant helps producing firms in making adjustments in inputs to maximize output so that profit can be maximize. It shows all the possible combinations of inputs that produce a given amount of output

What is a typical shape of the rate of output as a function of labor or capital?

The typical shape of the rate of output as a function of labor or capital is U Shape.

What is the Law of diminishing marginal Return:

Adding an additional input (factor of production) results in smaller increase in output at some point. The addition of larger amount of one factor of production reduce the per unit incremental returns. The decrease in the marginal output of a process of production as the quantity of one input is increased, while the all other factors of production remains constant.

What is the difference between marginal production and average production functions?

Marginal Production Function: Marginal Production function shows how all other inputs remain the same, the changes in one inputs varies the output of firm. Output changes as firm changes only one input and all other inputs remain the same.

Average Production Function: Average Production Function is Average product is the output per unit of inputs.

It is derived by: Total product/Units of factor Input

Rahul Sunny answered 2 years ago

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