ECON 356

In Class Exercise Nine - The Theory of the Firm:  The Mainstream Theory - Production

1.  What is the typical production function used in mainstream theory? 

2.  Explain the law of diminishing marginal returns?

3. Draw an isoquant curve and explain what it means.

4.  How would you show a technological change using an isoquant curve?  Graph:

5.  Draw an isoquant curve for perfect substitutes in production (inputs).  Make sure you understand the meaning of the shape.  Why is this not very realistic?

6.  Draw an isoquant curve for perfect complements in production (inputs).  Make sure you understand the meaning of the shape.

7.  True or false:  If the marginal product is decreasing, then the average product must also be decreasing.  Explain your answer.