and Production under a Labor-Saving Technology Shift
From the definition of quasi-rents as the value of output minus the costs of non-factor input, it follows that isoquants
will have linear sections an production functions will be nonconcave.
For each element of set T, O [member of] R + n has isoquants
. Farrell (1957) discovered such isoquants
as efficient boundaries or frontiers in Eq.
For neoclassical economists, capital is just an input into the process of production (represented in their textbooks as one of the axes on a two-dimensional diagram of isoquants
or as one of the exogeneous variables in an aggregate production function).
This section surveys Rothbard's analysis of isoquants
and isocosts in preparation for tracing out factor demand curves, and compares it with his later derivation of the factor demand curve, as well as his remarks on the causal influence of output prices on input prices.
We also graph the isoquants
for the liquidity-constrained high-default-cost household.
If the production function is q = 2L + 5K , then the associated isoquants
All of the combinations of time and money result in the same performance makeup of what is called a performance isoquant
. Figure 1 illustrates this concept with two notional performance isoquants
or efficient boundaries of the sections of T can be defined in radial terms as follows (Farrell 1957).
La fonction de production, qui s'ecrit : P = f (K, L)6, est le point de depart vers des schematisations extremes : un monde oE ne s'interferent que des courbes (Isoquants
, iso couts)7.