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
How the above would apply to non-renewable resources such as oil. This has general applicability to any competitive market. The issue here is that potential supply has a finite

Q. What is Monetarism? Monetarism:Monetarism was a right-wing economic theory (associated with work of Milton Friedman, in particular) which believed that inflation could be co

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4


Define the generality of economic theory in the modern economics. Generality of Economic Theory An economic theory is based onto assumptions imposed onto economic environmen

Determine the industrial core of world economy The industrial core of world economy saw its level of material productivity and standards of living explode in the 19th and 20th

(Granger, 1969, 1988), where it can be addressed in terms of a VAR (vector auto regression) system. If an export platform is important for the country, FDI inflows should result in

What is hyper inflation? How it can be reduced?   Hyper inflation means that prices of the consumable goods are very high. Prices can be decreased by supplying more goods in th

What is main difference between capital intensive goods and primary products?  Primary product means the major product in which the firm is dealing. Capital intensive good mea

Sita expects her future earnings to be worth Rs 100. If she falls ill, her expected future earning will be Rs 25, There is a belief that she may fall ill 2 with probability of -3