"Optimal Input Curve Analysis Is Useless

question 195

Essay

"Optimal input curve analysis is useless. Since firms never know the demand for their product with certainty, they will rarely operate at the optimal input combination." Agree or disagree?

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Definitions:

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Neutral Stimulus

A neutral stimulus is something in the environment that initially does not elicit any intrinsic response until it is paired with an unconditioned stimulus.

Conditioned Stimulus

An initially neutral signal that, once it is linked with a natural stimulus, eventually elicits a learned response.

Pavlov

Ivan Pavlov, a Russian physiologist known primarily for his work in classical conditioning, particularly experiments with dogs leading to the concept of the conditioned reflex.