Which of the following statements is/are true?

1. All isoclines are expansion paths but all expansion paths are not isoclines.
2. Short-run production functions involve adjusting all inputs, including fixed inputs like land or capital, to affect output.
3. Stock resources are those which are not utilized in one production period but can be stored for use in a later period.

Question

Which of the following statements is/are true?

1. All isoclines are expansion paths but all expansion paths are not isoclines.
2. Short-run production functions involve adjusting all inputs, including fixed inputs like land or capital, to affect output.
3. Stock resources are those which are not utilized in one production period but can be stored for use in a later period.

Accepted Answer

**Solution:**

1. **Isoclines and Expansion Paths:**
   - An *isocline* is a curve connecting points on isoquants where the marginal rate of technical substitution (MRTS) remains constant.
   - An *expansion path* traces the cost-minimizing combinations of inputs for different output levels, found where isoquants are tangent to iso-cost lines.
   - Not all isoclines are expansion paths because isoclines can represent any constant MRTS, while expansion paths specifically represent MRTS equal to the input price ratio.
   - Therefore, the statement "All isoclines are expansion paths" is incorrect.

2. **Short-Run Production Function:**
   - In the short run, at least one input (like land or capital) is fixed and cannot be changed.
   - Only variable inputs (such as labor) can be adjusted to change output.
   - Hence, the claim that all inputs, including fixed ones, are adjusted in the short run is false.

3. **Stock Resources:**
   - Stock resources are those available in fixed quantities at a point in time.
   - They may not be used during one production period but can be stored and utilized later.
   - Examples include minerals, coal, or timber that can be stockpiled.
   - This definition aligns with the third statement, making it true.

**Answer:** Only statement 3 is correct.

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