Summary ECO2003 Production in the long run

PRODUCTION IN THE LONG RUN

Isoquant: the set of all input combinations that yield a given level of output


The difference between the isoquant and the indifference curve: an indifference curve
provides a concise representation of a consumer’s preference; an isoquant curve or map
provides a concise representation of a production process.


Increasing return to scale: the property of a production process whereby a proportional
increase in every input yields more than proportional increase in output.


Constant returns of scale: the property of a production process whereby a proportional
increase in every input yields an equal proportional increase in outputs.


Decreasing returns of scale: the property of a production process whereby a proportional
increase in every input yield a less than proportional increase in outputs.