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A firm's production function is given by Q = 5K1/3 + 10L1/3, where K and L denote quantities of capital and labor, respectively. Derive expressions
A firm's production function is given by Q = 5K1/3 + 10L1/3, where K and L denote quantities of capital and labor, respectively.
- Derive expressions (formulas) for the marginal product of each input.
- Does more of each input increase output?
- Does each input exhibit diminishing marginal returns? Prove.
- Derive an expression for the marginal rate of technical substitution (MRTS) of labor for capital.
- Suppose the price of capital, r = 1, and the price of labor, w = 1. The firm wants to produce 200 units of output. What quantities of capital and labor would minimize the costs of producing 200 units of output? Show all your work.
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