• Isoclines: Lines connecting points of equal slope on isoquants, representing combinations of inputs where the marginal rate of technical substitution (MRTS) is constant (e.g., same input ratio).
• Expansion Path: A curve showing the cost-minimizing input combinations for different output levels, derived from tangency points of isoquants and iso-cost lines.
• Isoclines represent constant MRTS across isoquants, while an expansion path specifically traces optimal input combinations for increasing output under cost minimization. All isoclines are not necessarily expansion paths, as isoclines can exist for any MRTS, not just the cost-minimizing one. Conversely, an expansion path is a specific isocline where MRTS equals the input price ratio (w/r). Thus, the statement's claim that "all isoclines are expansion paths" is incorrect, and the converse is also misstated.
• Short-Run Production Function: In economics, the short run is a period where at least one input (e.g., land, capital) is fixed, and only variable inputs (e.g., labor, raw materials) can be adjusted to change output.
• Statement 2 claims that short-run production functions involve adjusting all inputs, including fixed ones. This is incorrect, as fixed inputs like land or capital cannot be adjusted in the short run by definition. Only variable inputs are adjusted to affect output, while fixed inputs remain constant.
• Stock Resources: Resources available in a fixed quantity at a given time, such as minerals, oil, or forests, which can be used in production or stored for future use (e.g., non-renewable resources like coal or renewable resources like timber if sustainably managed).
• The statement 3 accurately describes stock resources as those not used in one production period but capable of being stored for later use. For example, coal extracted but not burned can be stockpiled, or timber can be preserved. This aligns with economic concepts of resource management and intertemporal allocation.
Study Notes
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