How does the curvature of an isoquant relate to the marginal rate of technical substitution?
The isoquant identifies all the combinations of the two inputs which can produce the same level of output. The curvature of the isoquant is measured by the slope of the isoquant at any given point. The slope of the isoquant measures the rate at which the two inputs can be exchanged and still keep output constant, and this rate is called the marginal rate of technical substitution. Along the typical “bowed-in” or convex isoquant, the marginal rate of technical substitution diminishes as you move down along the isoquant. 7. Can a firm have a production function that exhibits increasing returns to scale, constant returns to scale, and decreasing returns to scale as output increases? Discuss. Most firms have production functions that exhibit first increasing, then constant, and ultimately decreasing returns to scale. At low levels of output, a proportional increase in all inputs may lead to a larger-than-proportional increase in output, based on an increase in the opportunity for each fact
