Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started