Question
Can you show a breakdown of how you solve this problem A firm uses fertilizer, labor, and greenhouses as inputs to produce tulips. Suppose that
Can you show a breakdown of how you solve this problem
A firm uses fertilizer, labor, and greenhouses as inputs to produce tulips. Suppose that when the quantity of labor and greenhouses is held fixed, the relationship between the quantity of fertilizer and the number of tulips produced is given by the following table:
Tons of fertilizer per month &Number of tulips per month
0 months 0 tulips
1 months 500 tulips
2 months 1100 tulips
3 months 1700 tulips
4 months 2200 tulips
5 months 2500 tulips
6 months 2600 tulips
7 months 2500 tulips
8 months 2000 tulips
a) What is the average product of fertilizer when 4 tons are used?
b) What is the marginal product of the sixth ton of fertilizer?
c) Does the production function exhibit diminishing marginal returns? If so, over what quantities of fertilizer do they occur?
d) Does the production function exhibit diminishing total returns? If so, over what quantities of fertilizer do they occur?
e) Suppose that when using one worker, one greenhouse, and one ton of fertilizer the output of tulips is 1000. Suppose that when using two workers, two greenhouses and two tons of fertilizer, the output of tulips is 2100. Can you say anything about the degree of returns to scale for this production structure at these input levels?
f) In addition to the information provided in e), suppose that when using three workers, three greenhouses and three tons of fertilizer, the output is 3000. What kind of returns to scale does this production function exhibit when moving from two workers, two greenhouses and two tons of fertilizer to three workers, three greenhouses and three tons of fertilizers?
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