Production Factors Analysis: Short vs Long Run

This lecture delves into the analysis of production factors in the short and long run, focusing on the marginal product of labor and capital, the concept of isoquants, and the optimal choice of production factors. It covers topics such as returns to scale, isocost lines, output maximization under cost constraints, and the economic interpretation of the Lagrange multiplier. Additionally, it explores the link between the marginal rate of technical substitution and marginal products, market equilibrium under perfect competition, consumer and producer surplus, and the elasticity of substitution. The lecture concludes with a discussion on the effect of resource variation on optimal choices and the concept of expansion paths.