Friday, July 23, 2021

Isocline

Isoclines are lines or curves that pass through points of equal marginal rates of substitution on an isoquant map. That is, a particular isocline will pass through all isoquants at points where the isoquants have a specified slope. There are as many different isoclines as there are different slopes or marginal rates of substitution on an isoquant. Isocline may be a straight line through the origin or it may be of irregular shape depending on whether the production function is homogeneous or non-homogeneous. In the case of the homogeneous production function, isocline is a straight line through the origin. If the production function is non-homogeneous, then the isoclines will not be straight lines through the origin but would be of an irregular shape.

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Disturbance term/Error term

The disturbance term, also commonly referred to as the error term, plays a crucial role in statistical modeling, particularly in regression ...