https://gdpark.blog/tags/production-theory/Recent content in Production Theory on gdpark.blogHugoenThu, 21 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-23-average-and-marginal-product-of-labor/Sun, 17 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-23-average-and-marginal-product-of-labor/We flip to the supplier side and dig into how output Q responds to labor L (with K fixed) — including why piling on more workers eventually starts hurting.https://gdpark.blog/posts/microeconomics-25-isoquants-the-uneconomic-region-of-production/Mon, 18 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-25-isoquants-the-uneconomic-region-of-production/That weird backward-bending chunk of the isoquant has a name — it’s the uneconomic region, and here’s exactly why it exists and why no sane firm would ever go there.https://gdpark.blog/posts/microeconomics-26-marginal-rate-of-technical-substitution/Mon, 18 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-26-marginal-rate-of-technical-substitution/We crack what the isoquant slope actually means — it’s the MRTS — and work out mathematically why that labor-for-capital swap rate keeps shrinking as you slide along the curve.https://gdpark.blog/posts/microeconomics-27-types-of-isoquants-linear-l-shaped-and-cobb-douglas/Mon, 18 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-27-types-of-isoquants-linear-l-shaped-and-cobb-douglas/A chill rundown of linear, L-shaped, and Cobb-Douglas isoquants — and why their shapes directly tell you everything about σ, the elasticity of substitution.https://gdpark.blog/posts/microeconomics-31-cost-and-cost-minimization/Tue, 19 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-31-cost-and-cost-minimization/We dig into the cost minimization problem — and spoiler, it’s basically the same deal as utility maximization, just swap the budget line for an isocost line.https://gdpark.blog/posts/microeconomics-32-expansion-path/Tue, 19 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-32-expansion-path/Unlike demand theory, firms chasing a fixed output level have zero income effect — just pure substitution — and tracing those cost-minimizing combos as output rises draws out the expansion path.https://gdpark.blog/posts/microeconomics-40-graphing-ac-mc-sac-and-smc-together/Thu, 21 Jul 2016 00:00:00 +0000https://gdpark.blog/posts/microeconomics-40-graphing-ac-mc-sac-and-smc-together/We finally plot AC, MC, SAC, and SMC all on one graph and trace exactly how they intersect and relate as capital K gets pinned at different levels — it all snaps into place!