Question
Question Suppose the production function for widgets is given by: Q = KL - 0.8K2 - 0.2L2 where Q represents the quantity of widgets produced,
Question
Suppose the production function for widgets is given by:
Q = KL - 0.8K2 - 0.2L2
where Q represents the quantity of widgets produced, K represents the annual capital input and L represents annual labor input.
(a) For K = 10, graph the total and average productivity of labor curves.
(b) At what level of labor input does this average productivity reach a maximum? How many widgets are produced at that point?
(c) Again assuming that K = 10, graph the MP1 curve. At what level of labor input does MP1 = 0?
(d) Suppose capital inputs were increased to k=20.How would your answer to parts (a) and (b) change?
(e) Does the widget production function exhibit constant, increasing or decreasing returns to scale?
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Economics
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
18th edition
978-0077413798, 0-07-336880-6, 77413792, 978-0-07-33688, 978-0073375694
