Page 348 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Unit-22: Marginal Conditions of Paretian Optimum

22.8 Summary Notes

• Condition which relates to optimum of factory demands that for and two firms between any two
factors maximum rate of technical substitution should be the same, by which for production of that
object, this both type of factor is used. On any point of isopuants, the maximum rate of substitution,
for production to keep the standard in place of one the rate of other factor of substitution.

22.9 Keywords

• Exchange: Change
• Specialization: To be special
• True Sufficient Conditions: Total conditions

22.10 Review Questions

1. What do you mean by the optimum condition of exchange?
2. What do you mean by the optimum condition of factor substitution?
3. Write a note on the optimum intertemporal condition.
4. Give four the optimum condition of produces substitute.

Answers: Self Assessment
1. Free 2. Divisible 3. Active 4. Fact
5. (a) 6. (b) 7. (a) 8. (c)
9. True 10. True 11. True 12. False

22.11 Further Readings

1. Microeconomics—Shipra Mukhopadhyay, Annie Books, 2011.
2. Microeconomics: An Advanced Treatise—S. P. S. Chauhan, PHI Learning.
3. Microeconomics: Behaviour, Institutions and Evolutions— Sampool Bowels, Oxford
University Press, 2004.

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