Question
A firm has the production functionQ=LK+ 2K. The associated marginal products are,MPL=KandMPK=L+2. The wage isw= $200, and the rental price of capital isr= $800.Required: (a)Are
A firm has the production functionQ=LK+ 2K. The associated marginal products are,MPL=KandMPK=L+2.
The wage isw= $200, and the rental price of capital isr= $800.Required:
- (a)Are the marginal products of labour and capital diminishing? Briefly explain.
- (2 marks)
- (b)Derive an expression for the firm's marginal rate of technical substitution. Is the marginal rate of technical substitution diminishing? Briefly explain.
- (2 marks)
- (c)Find the input demand functions for labour and capital as a function of the required quantity of outputQ.
(d) What is the cost to the firm of producingQ= 256 units?
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International economics
Authors: Robert J. Carbaugh
13th Edition
978-1439038949, 1439038945, 978-8131518823
