Answer to Question #245849 in Microeconomics for Mendie

Question

Explain and bring out the importance of the following concept:

1. Expansion Path
2. Isocline
3. Inferior Input
4. Economic Region Product
5. The Ridge Line

Answer 1

   1. Expansion path

 It is a graph that is used to show how a firm's cost-minimizing input changes as it expands production. it tracks out points of tangency of the isocost line and the isoquants.

 Importance

 It is used to connect optimal input combinations as the scale of production expands. producer planning to produce a certain number of units of a particular product at the lowest possible cost selects the point on the expansion path which is also on the isoquant associated with that output level.

 

 2. Isocline

It is a curve that starts from the origin and passes via the isoquant map of the firm and also along which the marginal rate of technical substitution of input X for input Y.

importance.

Isoclines can be used as a graphical method of solving an ordinary differential equation. The term is also used to refer to points on maps of the world having identical magnetic inclinations.

 

3. Inferior input

 It is an input that its demand reduces with output at given prices.

 

Importance

 Helps in determining how much of a product can be produced

4. Economic Region Product

 It defines the region in which the optimal combining factors will lie. It includes the negatively sloped portion of all isoquants

 

Importance

 It helps in creating the value of a product by applying labour on land and capital. It also generates income and employment.

 

5. The Ridge Line

 Is the locus of points of isoquants where the marginal products of factors are zero.

 

Importance.

 The upper ridge shows zero marginal products and the lower ridge indicates zero marginal product of labour