To model the input decisions for a production system, we plot labor on the horizontal axis and capital on the vertical axis. In the short run, labor is a variable input and capital is fixed. The short-run expansion path for this production system is:

Question

Quizplus · Accepted Answer

In the short run, capital is fixed, meaning it does not change regardless of the level of production. Therefore, any changes in production are achieved by varying the amount of labor. This is represented graphically by a horizontal line on a graph where labor is on the horizontal axis and capital is on the vertical axis, indicating that labor can change while capital remains constant.

To Model the Input Decisions for a Production System, We