Production function for wheat, Microeconomics

Production Function for Wheat

*  Farmers should choose between a capital intensive or labor intensive technique of production.

Isoquant Describing Production of Wheat

128_production of wheat.png

*  Observations:

 1) Operating at A:

  • L = 500 hours and K = 100 machine hours.

 2) Operating at B

  • Increase L to 760 and decrease K to 90 MRTS < 1:


3) MRTS < 1, hence the cost of labor should be less than capital in order for the farmer substitute labor for capital.

4) If labor is expensive, farmer would use more capital (such as U.S.).

5)  If labor is inexpensive, farmer would use more labor (such as India).

Posted Date: 10/12/2012 1:51:58 AM | Location : United States







Related Discussions:- Production function for wheat, Assignment Help, Ask Question on Production function for wheat, Get Answer, Expert's Help, Production function for wheat Discussions

Write discussion on Production function for wheat
Your posts are moderated
Related Questions
is the industry of electric power on the large economies scale

The efficiency loss of a tax is the tax revenue collected by government minus the value of the public goods financed through the tax. Why is this false?



Explain how diminishing returns differ from diminishing returns to scale. The answer should clearly distinguish among SR (one or more factors are fixed) and LR (where all facto

Formal and Informal systems  - MRP System Most production systems are full of 'pushes' and 'pulls'. The formal system issues orders, ie 'pushes'. The informal system tries to

INTERNATIONAL FINANCE CORPORATION: The IBRD loans are available only to member-country governments or with the guarantee of member-country governments. Further, IBRD can only

show that the necessary and sufficient conditions for consumer equilibrium under both cardinal and ordinal utility theories are identical .

The Hypothesis of Rational Expectations : In the General Theory (Keynes, 1936) we noted that the state of expectations was taken as given. There was, in addition, explici

Explain why each of the following factors may influence the own price elasticity of demand for a commodity. (i) Consumer preferences, that is, whether consumers regard the commodi