Reference no: EM133200014

Assignment:

Questions:

Give three examples of how the same level of production is/has been achieved using different combinations of capital and labor. You can use historical examples ( banking in the United States for example) or current examples across different economies (farming).

Key points:

Topic: Production in the long run

All inputs can be varied in the long run

Maximizing production follows the same mode as maximizing utility from earlier this semester instead of the various combinations of goods, it is the various combinations of labor and capital that can be used to produce the same level of output

Example: to dig a 10x10 x10 foot hole you can use 10 workers with 10 shovels or one worker with a backhoe

Isoquant curves = indifference curves

as you move up or down the curve, you substitute capital for labor

a producer tries to reach the highest isoquant (highest level of production) possible.