Posted by Ed on .
What would it mean if an expansion path eventually had a negative slope? Like the letter U on its' side?
And expansion path that looks like a letter U on its side (like a c or a backwards c?)
Dont know. I think a graph of an expansion path would be time on the x axis, some level of activity on the y axis. (possibly, the x axis could be some level of inputs) Anyway, for any x-value, there would be one and only one y (level) value. A sideways U shape would have two.
That said, however, an expansion path with a negative slope would indicate a period of contraction.
Managerial Economics -
The production engineers at Impact Industries hace dervied the expansion path shown in the following. The prcie of labor is $100 per unit