Input Quantity Restricted Production
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In economics, restrictions on the input space R + N are frequently imposed. In this chapter we analyze the impact on production induced by quantity restricted subvectors of inputs. Our interest in this topic is prompted by the Law of Diminishing Returns introduced into economic thought by Turgot (1767), see Schumpeter (1966). Loosely stated, the law of diminishing returns states that as equal increments of capital and labor are applied successively to a given plot of land, the output resulting from these applications will increase at first up to a certain point, after which further applications will result in decreasing product increments.
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