Question
1] Suppose that the production function of certain artifacts is determined by: q = kl - 0.8k2 - 0.2l 2, where q represents the annual
1] Suppose that the production function of certain artifacts is determined by:
q = kl - 0.8k2 - 0.2l 2,
where q represents the annual quantity of artifacts produced, k represents the annual quantity
of the capital factor and l represents the annual amount of the labor factor.
a) Suppose that k = 10; draw a graph of the average productivity and total productivity
job. What is the level of the labor factor with which the average productivity reaches
the maximum? How many artifacts are produced at that point?
b) Assuming again that k = 10, draw the curve of the PMgl
. At what level do we have
that the work factor is PMgl = 0?
c) Suppose that the capital factor increased to k = 20. How would its
answers to the previous two sections?
d) Does this artifact production function exhibit constant returns to scale,
increasing or decreasing?
2] A company that produces hockey sticks has a production function
determined by
q = 2 (K L) 1 / 2
In the short run, the amount of capital equipment in the firm is fixed at K = 100. The rate of
K's rent is r = $ 1 and L's wage rate is w = $ 4.
a) Calculate the curve of the total cost, in the short term, of the company. Calculate the curve of
short-term average cost.
b) What is the short-run marginal cost function of the firm? Which are
the CTcp, the CPcp and the CMg if the company produces 25 canes? Fifty
Canes? One hundred staves? Two hundred sticks?
c) Draw the curves of the CPcp and CMgcp of the company. Indicate the points
calculated in the previous paragraph.
d) Where does the CMgcp curve intersect the CPcp curve? Explain why the
The CMgcp curve always cuts the CPcp curve at its lowest point.
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