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QUESTION FIVE a) You are provided with the following production function for maize: Q = 100(K0.8 (0.2) i. Starting with a capital input of 4

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QUESTION FIVE a) You are provided with the following production function for maize: Q = 100(K0.8 (0.2) i. Starting with a capital input of 4 and a labour input of 49, show that the marginal product of labour and marginal product of capital inth decreasing. (5 Marks) ii. Calculate the Marginal rate of techrical substitution (3 Maiks) iii. Does this production function exhibit increasing, decreasing or costant (3 Marks) returns to scale. b) Illustrate income and substitution effect in the case of a normal good in the same (9 Marks) diagram. QUESTION FIVE a) You are provided with the following production function for maize: Q = 100(K0.8 (0.2) i. Starting with a capital input of 4 and a labour input of 49, show that the marginal product of labour and marginal product of capital inth decreasing. (5 Marks) ii. Calculate the Marginal rate of techrical substitution (3 Maiks) iii. Does this production function exhibit increasing, decreasing or costant (3 Marks) returns to scale. b) Illustrate income and substitution effect in the case of a normal good in the same (9 Marks) diagram

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