In Figure 6.7 points A, B, and C represent technically efficient combinations of inputs. It takes one person to use a jackhammer-neither two people and one jackhammer nor one person and two jackhammers is likely to increase production.
An example is the reconstruction of concrete sidewalks using jackhammers. Additional output cannot be obtained unless more capital and labor are added in specific proportions. Each level of output requires a specific combination of labor and capital. In this case it is impossible to make any substitution among inputs. Another example is musical instruments, which can be manufactured almost entirely with machine tools or with very few tools and highly skilled labor.įigure 6.7 illustrates the opposite extreme, th q fixed-proportions production function. For example, a toll booth on a road or bridge might be run automatically or manned by a toll collector. As a result the same output (say Qi) can be produced with mostly capital (at A), mostly labor (at C), or a balanced combination of both (at B). Here the MRTS is constant at all points on an isoquant. In the first case, shown in Figure 6.6, inputs to production are perfectly substitutable for one another.
Two extreme cases of production functions show the possible range of input substitution in the production process.
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