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Problem 1. A firm uses fertilizer, labor, and greenhouses as inputs to produce tulips. Suppose that when the quantity of labor and greenhouses is held
Problem 1. A firm uses fertilizer, labor, and greenhouses as inputs to produce tulips. Suppose that when the quantity of labor and greenhouses is held xed the relationship between the quantity of fertilizer and the number of tulips produced is given by the following table: Tons of fertilizer per Number of tulips per month month 3} b] C) d] El 1') What is the average product of fertilizer when 4 tons are used? What is the marginal product of the sixth ton of fertilizer? Does the total product function exhibit diminishing marginal returns? If so, over what quantities of fertilizer do they occur? Does the total product function exhibit diminishing total returns? If so, over what quantities of fertilizer do they occur? Suppose that when using one worker, one greenhouse and one ton of fertilizer the output of tulips is 10-00. 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? Suppose that when using three workers, three greenhouses and three tons of fertilizers, the output is 3000. What kind of returns to scale does this production function exhibit
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