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Suppose that additional units of capital affect the marginal productivity of labor.This is not unrealistic.Word processors increase the marginal productivity of secretaries.On the other hand,robotic equipment can completely replace a worker and,thereby,lower the marginal productivity of labor.Given this possibility,determine the conditions under which isoquants will not be convex (i.e.,concave).
Representativeness Heuristic
A cognitive bias in decision-making where the likelihood of an event is estimated based on how much it resembles existing stereotypes or patterns.
Availability Heuristic
A cognitive bias where people overestimate the importance or frequency of information that is readily available to them.
Anchoring and Adjustment Heuristic
A mental shortcut that influences the way people intuitively assess probabilities and make decisions based on initial information.
Escalation of Commitment
The phenomenon of investing increasingly more resources into a failing course of action due to cognitive biases and sunk costs.
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