Question: 1:

Proton-Metal, a small manufacturer of sheet-metal body parts for Proton, estimates its long-run production function to be

Q = -0.015625K³L³ + 10K²L²

Where Q is the number of body parts produced daily, K is the number of sheet-metal presses in its manufacturing plant, and L is the number of labor-hours per day of sheet-metal workers.Proton-Metal is currently operating eight sheet-metal presses.

(a) What is the total product function for Proton-Metal?The average product function? The marginal product function?

(b) Managers at Proton-Metal expect the marginal product of additional workers to fall beyond what level of labor employment?

(c) Proton-Metal plans to employ 50 workers.Calculate total product, average product, and marginal product?

Question: 2:

Engineers at the national research laboratory build a prototype car that could be driven 47 km per liter of RON95 fuel.They estimated that in mass production the car would cost $60,000 per unit to build.The engineers argued that the Congress should force U.S. car makers to build this energy-efficient car.

(a) Is energy efficiency the same thing as economic efficiency? Explain.

(b) Under what circumstances would the energy-efficient car described here be economically efficient?

(c) If the goal of a society is to get the most benefit from its limited resources, then why not ignore economic efficiency and produce the energy-saving car?