Book contents
- Frontmatter
- Contents
- PREFACE
- 1 INTRODUCTION
- PART I THE MICROECONOMIC THEORY OF PRODUCTION
- 2 THE TECHNICAL THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 3 THE ECONOMIC THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 4 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS: GENERAL THEORY
- 5 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS HOMOGENEOUS OF DEGREE ONE
- 6 ECONOMIC THEORY OF PRODUCTION WITH FIXED INPUT PRICES
- 7 THE THEORY OF COST WITH FIXED INPUT PRICES
- 8 THE ECONOMIC THEORY OF COST AND PRODUCTION WITH VARIABLE INPUT PRICES
- 9 ‘INFERIOR FACTORS’ AND THE THEORIES OF PRODUCTION AND INPUT DEMAND
- 10 THEORY OF THE MULTI-PRODUCT FIRM
- PART II MACROECONOMIC THEORIES OF DISTRIBUTION AND TECHNOLOGICAL PROGRESS
- REFERENCES
- AUTHOR INDEX
- SUBJECT INDEX
3 - THE ECONOMIC THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
Published online by Cambridge University Press: 07 October 2011
- Frontmatter
- Contents
- PREFACE
- 1 INTRODUCTION
- PART I THE MICROECONOMIC THEORY OF PRODUCTION
- 2 THE TECHNICAL THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 3 THE ECONOMIC THEORY OF PRODUCTION UNDER CONDITIONS OF FIXED PROPORTIONS
- 4 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS: GENERAL THEORY
- 5 TECHNICAL ASPECTS OF CONTINUOUS PRODUCTION FUNCTIONS HOMOGENEOUS OF DEGREE ONE
- 6 ECONOMIC THEORY OF PRODUCTION WITH FIXED INPUT PRICES
- 7 THE THEORY OF COST WITH FIXED INPUT PRICES
- 8 THE ECONOMIC THEORY OF COST AND PRODUCTION WITH VARIABLE INPUT PRICES
- 9 ‘INFERIOR FACTORS’ AND THE THEORIES OF PRODUCTION AND INPUT DEMAND
- 10 THEORY OF THE MULTI-PRODUCT FIRM
- PART II MACROECONOMIC THEORIES OF DISTRIBUTION AND TECHNOLOGICAL PROGRESS
- REFERENCES
- AUTHOR INDEX
- SUBJECT INDEX
Summary
Introduction
The presence of fixed input proportions establishes a technological production ray. Economic considerations do not play so crucial a role as they do when production is subject to variable proportions. Indeed, the only two economic questions posed are: (a) should the product under consideration be produced; and (b) if so, in what quantity. All questions pertaining to the organization of production are settled on strictly technological grounds. Thus the exposition in this chapter is considerably more limited than in chapters 4 and 5 below.
Throughout the discussion several familiar terms are used. All of these are defined in detail in chapters 4 and 5; except for noting the particular circumstances of their use, we rely upon the reader's prior knowledge of their meaning.
The expansion path
When treating variable-proportions production functions, it is convenient to define and distinguish between an isocline and an expansion path. The former refers to a path along which the marginal rate of technical substitution is constant, the latter to the path along which the marginal rate of technical substitution equals the corresponding input-price ratio. The expansion path is a special isocline, of course, if all input prices are independent of the quantities of inputs used.
An isocline is strictly determined by technological conditions, while economic considerations determine the expansion path. Indeed, the latter is a path of economic efficiency in the sense that either cost is minimized for each level of output or output is maximized for each level of cost. when the production function is smoothly continuous, the expansion path is easily determined by means of the Lagrange technique for constrained extrema.
- Type
- Chapter
- Information
- The Neoclassical Theory of Production and Distribution , pp. 47 - 59Publisher: Cambridge University PressPrint publication year: 1969