Some Further Comments on Input Classifications

Abstract

In an earlier issue of this Journal, Puu (1971) presented geometrical interpretations of the four possible combinations of Hicksian (1939) input complementarity, substitutability, and inferiority. Using three curves-an isoquant and an iso-MPP (Marginal Physical Product) curve for each of the two inputshe showed the four possibilities to be: (a) The inputs may be complements. In this case neither input may be inferior. (b) The inputs may be substitutes with neither input inferior. (c, d) The inputs may be substitutes with one (but not both) of the inputs inferior. This note expands on Puu's analysis in two ways. The first is to show that, adopting Ferguson & Saving's classifications (1969, pp. 776-77), where neither input is inferior, one is superior and the other is normal. There are then six classification possibilities, and the conditions for superiority or normality may be inferred from the relations between Professor Puu's three curves. The second purpose of this note is to solve for the combinations of elasticities of the three curves leading to input substitutability, complementarity, inferiority, normality, and/or superiority. It is shown that, given the iso-MPP curves for the two inputs, a small change in isoquant elasticity on balance affects only the possibilities for input inferiority and superiority.