00:01
Okay, so to illustrate the difference here in expansion paths between a nonlinear production function and a linear homogeneous production function, we can describe the two scenarios.
00:10
So for a nonlinear production function expansion path, we can imagine a curved line on a graph representing a factory's production capabilities.
00:24
Well, the path is not going to be straight because the factory experiences varying returns to scales as it increases its output.
00:32
So again, nonlinear, makes the means, not straight.
00:37
And then the curve might start off steep, showing significant increases in output for small increases in inputs.
00:47
So increasing returns to scale, and then it may flatten out.
00:50
So the constant returns to scale and eventually curve back, indicating decreasing returns to scale...