Different types of product substitution with economic decisions regarding the production of output of each type of production.

a. Constant rate of substitution:

• It means that unit change in one product is throughout accompanied by the same unit opposite change in other product.
• Gram and wheat, for example, substitute for land at constant rate.

b. Increasing rate of substitution:

• Each unit increase in the level of one product is accompanied by larger and larger decrease in the level of the other product.
• For example, wheat and gram will substitute at an increasing rate for capital and labor.

c. Decreasing rate of substitution:

• A unit increase in the level of one product in this case is accompanied by lesser-by-lesser decrease in the level of the product.
• Dairy and crops within a limited range may substitute at decreasing rate.

Summary of Basic enterprise relationship