• Chapter 5 questions:
  • 1.4 (production functions)
  • 2.2 (short-run production)
  • 4.3 (returns to scale)
  • 4.8 (returns to scale)
  • 5.5 (innovation)
• Answer the following questions about long-run practices. Suppose the number of patients seen per week can be "produced" with physician (DR) time and physician's aide (PA) time. The following table mimics that of Table 5.2 (page 135) of your text by showing the number of patients that can be seen per week for different combinations of DR time and PA time. Given this data, answer the questions posed below.

	Aide (PA) hours per week
Physician (DR) hours per week	40	60	80
30	200	300	360
40	400	550	600
50	550	700	750

1. What is the average product of an hour of aides' time if 30 hours of a physician's time are combined with 40 hours of an aides' time per week?
2. What is the marginal product of an hour of aides' time if a physician's works 40 hours per week and an aide works between 40 and 60 hours each week?
3. If a DR works 40 hours per week, are there diminishing marginal returns to more aide time?
4. The table indicates that 550 patients per week can be seen using two different combinations of DR and PA time: (50 DR, 40 PA) and (40 DR, 60 PA). Using this information, what is the value of the MRTS between PA and DR time when 550 patients are seen per week? (That is, what is MRTSPA,DR?). Describe in words the meaning of this calculated value of MRTS.

Figure 5.2 A Family of Isoquants 6 K, Units of capital per day . . . . . . . . .. .... . .. . ........ O 3 . . . . . . e C 2 . . ....... . .. ....... q = 35 a . .. . q= 24 . .. .. . . ... 9= 14 L, Workers per day These isoquants show the combinations of labor and capital that produce 14, 24, or 35 units of output, q. Isoquants farther from the origin correspond to higher levels of output. Points a, b, c, and d are various combinations of labor and capital the firm can use to produce q = 24 units of output. If the firm holds capital constant at 2 and increases labor from 1 (point e on the q = 14 isoquant) to 3 (c), its output increases to q = 24 isoquant. If the firm then increases labor to 6 (f), its output rises to q = 35. 135