Change in volume and production costs in the short run. Law of diminishing returns

Law of diminishing returns

Within a short period of time, the firm can combine fixed capacities with varying amounts of other inputs. In what way does the volume of production change in this case with the use of different amounts of resources? This question is generally answered by the law of diminishing returns.

The law of diminishing returns states that in the short run, when the amount of production capacity is fixed, the marginal productivity of a variable factor will decrease starting from a certain level of input of this variable factor.

The marginal product (productivity) of a variable factor of production, such as labor, is the increase in output resulting from the use of an additional unit of this factor.

The law of diminishing returns can be represented by the example of a small carpentry workshop for the manufacture of furniture. The workshop has a certain amount of equipment - turning and planing machines, saws, etc. If this firm were limited to just one or two workers, then the total output and labor productivity per worker would be very low. These workers would have to perform several labor tasks, and the advantages of specialization and division of labor could not be realized. In addition, a significant part of the working time would be wasted when the worker moves from one operation to another, preparing the workplace, etc., and the machines would simply be idle most of the time.
The workshop would be understaffed, machines would be underutilized, and production would be inefficient due to an excess of capital relative to the amount of labor. These difficulties would disappear as the number of workers increased. As a result of such changes, time losses during the transition from one operation to another would be eliminated. Thus, as the number of workers able to fill vacant jobs increases, the additional or marginal product produced by each successive worker will tend to increase due to the increase in production efficiency. However, such a process cannot be endless. A further increase in the number of workers creates the problem of their surplus, that is, the workers will underutilize their working time. Under these conditions, there will be more labor in the workplace in proportion to the unchanged value of capital funds, i.e. machines, machine tools, etc. The total volume of production will begin to grow at a slower pace. This is the main content of the law of diminishing returns of the means of production (see Table 5.2).

The table shows how, with a change in the number of workers from 1 person to 9, the average labor productivity per 1 worker changes from 10 units to 6.8 units of production with a change in the total volume of production from 10 to 63. With a decrease in the volume of production to 62 units, there is negative marginal return of used labor resources, that is, when 9 people work at this company.
A graphic representation of the law of diminishing returns is shown in Figure 5.3.

As more and more variable resources (labor) are added to a fixed amount of fixed resources (in this case we are talking about machine tools, machines, etc.), the volume of production received from the activities of workers will first increase at a decreasing rate (15, 12, 10, etc. units according to Table 5.2.), Then it will reach its maximum (63 units of the total volume ), after which it will begin to decrease, dropping to 62 units.

Any production process has the characteristic feature that, with a constant amount of a constant factor, an increase in the use of a variable factor will inevitably lead to a decrease in its productivity. This is due to changes in returns from the variable factor. First initial stage, When

1 Since we are talking about single changes in the factor, the change in the total product should also be measured in physical units, i.e. MP L "f(K, L + 1) -f(K, L).

an insignificant amount of a variable factor is involved in production, each additional unit of the latter turns into an increase in the marginal product from this factor. However, as the use of a variable factor increases, the growth of its marginal product stops and then begins to decline. This dependence is called the "law of diminishing returns" or "the law of diminishing marginal productivity of a variable factor."

As the use of the variable factor increases, while other factors remain unchanged, a point is always reached at which the use of an additional amount of the variable factor leads to a constantly decreasing increase in the product, and then to its absolute reduction.

The reason for the law of diminishing returns lies in the violation of the balance in production between constant and variable factors. Low efficiency at low equipment load can be increased by introducing an additional amount of variable factor into production, which will lead to an increase in output to an increasing extent. On the contrary, excessive loading of equipment will result in a drop in efficiency and a decrease in output.

The operation of the law of diminishing returns leads to four important conclusions:

1) there is always a cost area when their increase is not
leads to a decrease in the total product (all the first private products
water are positive). This area of ​​costs is called "economic
what area";

2) in a short-term period, when at least one of the fact
production tori remains unchanged, the volume is always reached
application of a variable factor from which the increase in the last
leads to a decrease in its marginal product;

3) there is scope for change within the economic domain
factor from which a further increase in its use is
it is treated by a decrease in the volume of output;

4) the possibility of increasing output in the short term,
those. by increasing the application of the variable factor are limited.

Indicators of return on a variable factor are the marginal and average products, which characterize the level of marginal and average productivity of the factor of production. In view of the fact that the law of diminishing returns reflects changes in increments of the total product, the very operation of the law manifests itself in changes in the marginal product from a variable factor. It is the slowdown in growth, and then the decrease in marginal product, that causes the decrease in

the appearance of the average product, and at a certain moment - and the reduction of the total product (Table 4.1).

Table 4.1 Production results with one variable

At the same time, it should be taken into account that, firstly, the law of diminishing returns is applicable only to the conditions of the short-term period; secondly, the intensity of the action of the "law" is due to the peculiarities of the technology and manifests itself in different production processes in different ways.

Product curves from a variable factor

Since the product is a function of a variable factor, it is possible to give a graphical representation of the change in the values ​​of the product depending on the change in the values ​​of the variable factor. On the horizontal axis we plot the values ​​of the variable factor, and on the vertical axis - the values ​​of the product. Connecting the obtained points, we get product curves from variable factor: the curve of the total product, the curve of the average product and the curve of the marginal product of the variable factor.

Given the operation of the law of diminishing returns, the production process can be represented as three constituent parts, each of which is characterized by a special type of return on the variable factor - growing, constant and decreasing productivity of the variable factor.

In the case of increasing returns on a variable factor, the nature of the production process is such that each additional unit of the variable factor yields a greater increase in total output than the previous unit of the factor. Such production function expressed by the equation

Where A And b- some constant coefficients;

X- the amount of variable factor applied.

Production will be characterized by an increase in the average (AR X= Q: X \u003d (aX + bX 2): X \u003d a + bX) and marginal (MP X \u003d dQ: dX \u003d a + 2bX) products (Fig. 4.1).

The part of the production process characterized by a constant return on the variable factor reflects a linear relationship between the amount of the input variable factor and the total product and is expressed by the function Q= Oh. Since the return on each subsequent unit of the variable factor remains unchanged, the marginal product is equal to the average product, and their values ​​are constant: AR X= Q:X = aX:X= A And MP X \u003d dQ: dX \u003d a(Fig. 4.2).

type function Q \u003d bX - cX 2 will reflect the dependence of that part of the production process, which is characterized by diminishing returns on the variable factor. Since in this case the involvement in the production of each additional unit of the variable factor leads to a decrease in the marginal product MP X = dQ: dX= = b- 2cX, then this causes a fall in the growth of the total product, and, consequently, the average product AR X \u003d Q: X \u003d (bX- cX 2): X \u003d b - cX(Fig. 4.3). The fall in the marginal product from the variable factor indicates the limited possibilities for increasing output, which reaches maximum values ​​when the marginal product becomes equal to zero for a certain amount of the variable factor Xn. Since the use of it is beyond the magnitude X n will lead to a decrease in the total product, this indicates the limited use of the variable factor itself, since beyond such a boundary, production becomes technologically inefficient: with a large cost of the factor, we get a smaller result.

Each of the considered functions reflects only separate stages of the production process. Combined together, they give an idea of ​​the patterns of change in the product from a variable factor in the short term (Fig. 4.4). The production function of such production is described by an equation of the type Q = aX + + bX 2 - cX 3. For a given function, each point on the total product curve shows the maximum output for each individual value of the variable factor.

Average and marginal product curves can be constructed using the total product curve. Since the slope of the beam passing through the origin and a point on the curve (angle α),

shows the average values ​​of the function, and the slope of the tangent at any point of the curve (angle β) - the values ​​of the increments of the function for unit changes in the variable, then the average product (AR X) in any point on the total product curve is equal to the slope of the beam passing through given point(the tangent of the angle α), and the marginal product (MR X)- the slope of the tangent to this point (the tangent of the angle β).

Comparing the angles, it is easy to see that as the variable factor increases, the values ​​of the average and marginal products will change. At the initial stage (tga.< tgβ) the growth of the total product is accompanied by an outpacing, in relation to the average, growth of the marginal product, which reaches a maximum at the point A. Then 82

marginal product begins to decline, while the average product continues to rise, reaching a maximum at the point IN, where it is equal to the marginal product. Thus, stage I is characterized by an increase in the return on the variable factor. At stage II, after the point IN, despite the decline in both the marginal and average products, the total product continues to grow, reaching a maximum at the point WITH at zero marginal product, i.e. at the point where the first derivative of the function is

zero, i.e. at (TP X) \u003d MP X \u003d 0=> (TPx)=max. Because on this

stage, output increases in proportion less than the increase in the variable factor, then it is appropriate to speak of diminishing returns from the variable factor. At stage III, after the point WITH, marginal product becomes negative and there is a decrease not only in the average, but also in the total product. Since the production function does not allow inefficient use of factors, this stage is outside the scope of the economic domain and is not part of the production function.

The relationship between aggregate, average and marginal products is expressed in several ways:

With an increase in the variable factor, the total product
where increases if marginal product values ​​are positive, and decreases
shrinks when marginal product values ​​are negative;

With the growth of the total product, the values ​​of the marginal product
it is always positive, and when it decreases, it is negative;

The total product reaches its maximum when the marginal
product zero;

The average product of the variable factor increases until
its values ​​are below the values ​​of marginal product, and decreases if
they are above the values ​​of marginal product;

In the case of equality of the values ​​of the average and marginal product
tov average - reaches its maximum.

The nature of the changes in the values ​​of the product with an increase in the amount of a variable factor is the result of the interaction of all factors of production. Stage I is inefficient due to the imbalance between the fixed and variable resource while underutilizing the former. In order to improve overall efficiency, the firm should increase the use of the variable resource, at least up to stage II. Although the effectiveness of the variable factor decreases in stage II, increasing its use increases the return on the constant factor and leads to an increase in overall efficiency. Stage III characterizes the exhaustion of the effectiveness of constant

resource and the overall efficiency begins to decline, which means the absolute irrationality of the implementation of production with so many variable factors. Optimal in terms of overall production efficiency is stage II. Therefore, the firm must use the amount of variable resources that ensures it stays within this stage. If the demand for the firm's product does not allow it to reach this stage, the firm must stimulate demand for its product or use excess production capacity for the production of other products.

Optimal the use of such an amount of a variable factor is considered at which the maximum output is achieved.

Since within the framework separate production production resource can be used in different production processes and for production various benefits, then the solution to the problem of its effective use is associated with ensuring such a distribution of the resource between various production processes, in which its marginal productivity will be the same in all processes where it is used (Fig. 4.5). Suppose some factor of production X applied to processes A and B at the same time. In process A, it is used in quantity X 1 and its ultimate performance

(MP A X) is equal to X 1N. In process B, the same factor is applied in quantity ^ and its marginal productivity (MR B X) is equal to X 4 T. Pre-

the unit productivity of a factor in process A is higher than its marginal productivity in process B, since X t N> X 4 T. Moving a certain amount of a factor from process B to process A would mean an increase in the return on the factor in process B and its decrease in process A. But the total productivity of the factor would increase and output would increase. It is obvious that the increment in the volume of output will be achieved until the marginal productivity of the factor in both processes is equalized: X 2 N 1 = X 3 T 1. So as X 1 NN 1 X 2 > > X 4 TT 1 X 3, That KMNX 1 + OPTX 4< KLN t X 2 + OST t X 3 . This suggests that when the factor is redistributed between different production processes, which ensures the leveling of the level of marginal productivity of the variable factor, the total return on this factor increases, and the maximum efficiency of the use of the factor is achieved with such a distribution that ensures the same level of marginal productivity of the factor in all processes where it is applied.

4.3. PRODUCTION IN THE LONG TERM. SUBSTITUTION OF FACTORS OF PRODUCTION. TYPES OF PRODUCTION FUNCTIONS

The nature of the accepted management decisions. The short period involves the solution of operational (tactical) tasks, and the long-term -- conceptual (strategic). In this regard, in the short term, models of the production function are used, which characterize the dependence of the volume of output on the volume of variable factors, while all the others remain unchanged.

Consider an example. Let 200 units of a certain product be produced using a certain set of factors. Let us begin to increase one of the factors, for example, the labor force, by increasing the number of workers, which was originally equal to 100, by adding 20 workers in succession. Other factors are left unchanged. The results of production in the form of the number of units of the production product and other indicators are presented in the following table:

As can be seen from the table, output (income) with an increase in one of the resources grows disproportionately to the increase in this resource, but at a lower rate, that is, there is a decrease, a decrease in the increase in output, and thereby profitability. Similarly, it behaves, that is, decreases, and productivity, the return of this type of resource, represented in the example considered by the output per employee. The observed dependence reflects the essence of the law of diminishing returns, returns.

The reason for the diminishing returns effect is fairly obvious. After all, all resources, factors of production "work" in a complex, so it is necessary to observe a certain ratio between them. Increasing one factor with a fixed value of others in conditions when the factors were initially coordinated with each other, we generate a disproportion. The number of employees no longer corresponds to the amount of equipment, the number of equipment - to production areas, the number of tractors - to the area of ​​arable land, etc. Under these conditions, an increase in one type of resource does not cause an adequate increase in the result, income. The return of the resource is reduced.

Consider a one-factor model. This means that only one of the resources is variable, and all the others do not change. In this case, the following parameters are entered.

Total product (TR) -- the amount of production obtained from the use of the entire volume of the resource.

Average product (AR) -- the amount of production obtained from the use of a unit factor. AP can be determined by the formula AP = TP: F,

marginal product(marginal product) (MP) -- the amount of production obtained from the use of an additional unit of the resource. It is defined as the ratio of the increment in the total product? TP = TP 1 - TP 0 to the increment in the amount of factor used (F = F 1 - F 0): MP = ?TP: ?AF.

The change in these indicators occurs in accordance with the law of diminishing returns (or diminishing productivity) ". It says that as the investment in the production of any product of one of the variable resources increases (with all the others unchanged), the return on this resource, starting from a certain period , falls.

The operation of this law can be illustrated using the graphs presented in Fig. 1, where it is possible to single out separate sections characterizing the change in the indicators of the total, average and marginal products. The segment OA determines the growth of productivity or returns. With an increase in the cost of a variable resource from zero to h, the indicators of the total product (TP), average product (AP) and marginal product (MP) increase. This means that an increase in investment in the production of a given resource will increase not only the total output, but also the output per unit of this resource.

Segment AD illustrates the operation of the law of diminishing returns. In this case, marginal product decreases. However, the dynamics of the total and average products in this segment is not the same. Since this is where the law of diminishing returns begins to operate, the marginal product begins to decrease, reaching its maximum value at point A. However, both the total and the average products still increase, i.e. each subsequent unit of the resource provides a product increase that is less than the previous one. But this increase will give an increase in the total product and will still be sufficient for the average product to also increase, although the growth rates of both (TR) and the other (AR) indicators will noticeably decrease.

At point B, the average product reaches its maximum value, and starting from this point, it decreases in the same way as the indicator of marginal product. At the same time, the total product continues to grow, reaching its maximum value at point C.

This means that an increase in a unit of resource provides such an insignificant increase in product (smaller than the increase in resource) that the product per unit of resource begins to decline.

Rice. 1.

Finally, the segment CD is a segment of the absolute decline in production, when each additional unit of the resource does not bring an increase in the product, but leads to its reduction. In this case, the marginal product is negative meaning and all indicators TR, AR, MR decrease.

It must be borne in mind that there is a clear geometric relationship between the graphs of all indicators. Index average values s (average product) reaches its maximum value when it becomes equal to the indicator of the marginal value (marginal product). This is explained by the fact that the growth of the average value is possible only when an additional volume greater than the average value itself is added to it, otherwise there will be no growth. Conversely, a decrease in the average value is possible only when a smaller additional value is added to it. Thus, the average value increases when the limit value is greater than the previous average value, and decreases otherwise.

Therefore, the maximum average value (or its minimum) will be achieved in the case of equality of the limiting and average values. It is this point that will determine the maximum production efficiency (maximum product per unit cost). The value of the resource F 1 corresponding to this volume of output (with АР = MP) has great importance for tactical short-term development of the firm.

The geometric relationship between the total and average products is that on the graph of the total product, the average product at any point is given by the steepness - the slope of the line from the origin to this point. It is obvious that point B corresponds to the greatest steepness of such a line.

The locus of marginal product at any point on the output curve is determined by the slope of that curve at that point. In turn, the slope of the output curve equal to the angle the slope of the tangent through the given point. It is at point C that the slope of the tangent is greatest.

The law of diminishing returns applies to a certain technology and, accordingly, to a short period of time. However, in the long term, technology changes, and as a result of the action of scientific and technological progress, changes are determined by technological improvements.

It means that:

firstly, with the same amount of resources used, a greater output can be achieved;

secondly, the beginning of the law of diminishing returns is moved to the region of a larger value of the variable resource;

thirdly, the maximum possible use of the variable factor provides a greater volume of production with more advanced technologies. On the chart, all this will mean an upward shift in the total product curve (Fig. 2).

The law of diminishing returns is sometimes called the law of increasing costs. This means that performance and cost indicators are mutually inverse. In other words, one can determine, for example, how much output will be produced by one hour of labor (productivity or average product of labor) or how much labor is needed to produce a unit of output (labor intensity or average cost). Therefore, it will be logical to move from the analysis of product indicators to the analysis of cost indicators.

Rice. 2. The impact of scientific and technological progress on the law of diminishing returns

2 Law of diminishing returns.

The interchangeability of factors of production provides the commodity producer production choice. However, in real life a particular entrepreneur is more interested in the question of what the output will be if an additional amount of resources is involved in the production process. Imagine the Minsk Worsted Combine, where, according to the technology, one weaver serves 10 looms. You can increase the number of machines, leaving the same number of weavers. Of course, the increase in machine equipment will lead to an increase in output. But a weaver will not be able to service 15 looms as efficiently as 10, and 20 as efficiently as 15. Therefore, despite the general increase in the volume of output, the increase in the output of goods from the use of each subsequent loom, with the same number of weavers, will be less than from the previous one.

It is possible to imagine the opposite situation: without increasing the number of machines, to hire more weavers. Then each worker will maintain a smaller amount of equipment, and the machines will work better. But the productivity of the equipment is limited, so the production of weavers will decrease.

Thus, at a certain level of scientific and technical progress, an increase in investment in the production of one type of resource with the remaining amount unchanged leads to diminishing returns from this resource, or, starting from a certain time, the sequential addition of units of a variable resource to an unchanged fixed resource gives a decreasing increase in this resource.

The law of diminishing returns works under certain conditions.

1 First, all units of the variable factor are homogeneous. In relation to labour, for example, this would mean that each additional worker has the same mental faculties, qualifications, skills, coordination of movements, education, work skills, etc., as previously accepted.

2 Secondly, the law presupposes the constancy of the technical and technological level. If there is technological progress, then there will be a progressive shift of the aggregate product curve in the direction of growth.

3 Thirdly, the law presupposes the immutability of at least one factor of production.

Consider the operation of the law of diminishing returns on a specific example

Law of diminishing returns

This hypothetical material can be used to construct the corresponding curves

3 Production. Aggregate (total), average and marginal product.

The total, or total, product (TP) of a variable factor is total of manufactured goods in physical terms, which increases as the use of one variable resource increases, other conditions being the same.

If the total (cumulative) product is divided by the amount of a variable factor used in production, for example, labor (L) or capital (K), we get the indicator of the average product (AP):

AR L = TP / L

where AR is the average product of the variable factor;

K - variable resource (capital) or L - variable resource (labor).

Marginal product (MP) is the additional output that is achieved by increasing the use of a variable resource while the amount of other resources remains unchanged:

MP = DTP / DK or MP = DTP / DL

where MP is the marginal product of capital or labor;

DTP is the change in total output corresponding to the change in DK or DL ​​of units of capital or labor used, with the number of other factors held constant.

The total product curve goes through three phases. First of all, it rises at an accelerating pace; then its growth occurs at a slower pace; finally reaches a maximum and begins to decline. The marginal product curve reflects the specifics of the movement of the total product. The point is that marginal product is the slope of the total product curve. In other words, marginal product measures the change in total product associated with the addition of an additional worker. Accordingly, all phases of the movement of the total product are also reflected in the dynamics of the marginal product. As long as total product grows at an accelerated rate, marginal product increases.

The phase of growth of the aggregate product at a slow pace corresponds to the fall of the marginal product, which remains positive. The marginal product goes negative when the total product reaches its maximum.

The average and marginal product are also characterized by a certain dependence. As long as the marginal product exceeds the average product, the latter increases. If the marginal product is less than the average product, then the latter falls. The point E of the intersection of these two curves determines the maximum value of the average product.

Thus, production can be divided into the following stages

Stage 1. Associated with the start of production, when the number of labor resources is 0, and continues until the moment when the marginal product and the average product are equal to each other, and the latter reaches its maximum value.

Stage 2. Begins at the moment when the average product has the highest value, and continues until the marginal product of labor becomes equal to zero.

Stage 3. The marginal product becomes negative, the total begins to decline.

At the first stage in in a certain sense there is an overrun of resources, as the manufacturer incurs costs for equipment for which he does not have enough workers. The firm could produce the same output with less capital and the same amount of labor because there is excess capacity. However, since the amount of capital is taken as a constant, it is not possible to use it in smaller amounts.

Similarly, in the third stage, a large number of labor in relation to capital. The marginal product of labor becomes negative because workers interfere, producers are forced to pay each other for all hours of labor, which leads to a decrease rather than an increase in output. The same thing happens at the first stage, when equipment is paid for, which is not used due to insufficient labor resources.

It would be desirable for the organizers of the production to avoid the first and third stages and stay in the second. Only in this case there is no excess of effectively used labor and capital; there is no need to pay for unused factors of production.

The additional cash income generated by the sale of the marginal product is the income from the marginal product.

It should be emphasized that the indicators of average and marginal products characterize, respectively, the average and marginal productivity of a variable resource. For example, if the variable resource is labor, then the average labor product expresses the productivity of the "average" worker, and the marginal product expresses the labor productivity of each additional worker used in production.

The essence of the law of diminishing productivity of factors of production is that as the use of one resource increases, while others remain unchanged, the marginal product of a variable factor will decrease. In other words, the increase in output is limited if only one factor changes. In this regard, the equality of two indicators is important - the marginal and average returns of production factors. The excess of the average return over the marginal one is a signal that the effective expansion of production by increasing the use of only the factor is no longer possible. Changes in the totality of factors used are required.

The validity of the law of diminishing productivity of factors of production is easily illustrated by concrete examples. Otherwise, for example, by involving additional workers in Agriculture could feed the population the globe from 1 hectare of fertile land.

The theory of marginal productivity is used only under the condition of interchangeability of factors of production. If there is no such substitutability, it is impossible to distinguish the marginal product obtained by changing one factor from the marginal product obtained by changing other factors. In this case, the additional investment of one of the factors of production, while the others remain unchanged, leads only to an inefficient use of this resource without any impact on the volume of output.

Aggregate supply in the labor market

In conditions of perfect competition, the firm is not able to influence the price of its products, so it can get more profit only by reducing costs. Therefore, the first important task of the firm is to find such a combination of factors of production that will minimize costs. This task is similar to consumer choice, and similar tools are used to solve it.

Experience shows that there is a direct relationship between the volume of output and the number of factors of production used. At the same time, the factors of production are used in a certain combination, which is dictated by technology. The relationship between any combination of factors of production and the maximum possible output for it is expressed in production function(1.1):

Q = f (F 1 , F 2 , F 3 … F n), (1.1)

where Q is the maximum output for a given technology and a combination of factors;

F 1 …Fn are factors of production.

Each type of production has its own production function. However, they all have a number common properties:

- if we assume that the costs of any one factor increase, and all other factors do not change, then we can trace a gradual decrease in the increase in the volume of production caused by the expansion of the use of this factor. This trend is called law of diminishing returns variable factor of production.

Distinguish between total, average and marginal product of a variable factor of production . General product- this is the amount of production, the output of which is determined by a certain value of this factor, provided that all other factors of production do not change . Average product is output per unit of a factor (for example, labor productivity). marginal product is the increase in total product caused by the application of one additional unit of the variable factor.

Factors of production are characterized by interchangeability and complementarity. Any good can be produced by using various factors in various combinations.

It is important to distinguish between short-term and long-term periods of a firm's activity. The basis of this difference is not the length of time, but the possibility or impossibility of changing the dimensions of all the factors used. In the short run, some factors of production are constant, i.e. their application cannot be extended. The other part of the factors are variable factors, the size of which changes with the change in output.

In the long run, all factors of production are variable. If they change in the same proportion, then there is a change in the scale of production, and the law of diminishing returns does not apply. Distinguish between positive, negative and constant economies of scale. A positive effect of scale means that output grows faster than costs, while a negative one means that it grows more slowly. With constant economies of scale, output grows at constant costs.

If we assume that only two factors of production are used - labor and capital, then the production function will take the form (1.2):

Q = f (K, L), (1.2)

where Q is the production function;

f(K) – labor;

f(L) is capital.

Her graphic image is isoquant(line of constant amount). This is a curve, each point of which is a combination of labor and capital, which ensures the release of a certain volume of output (see Fig. 1.1).