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Suppose that The Acme Widget Co. uses capital (K) and labor (E) to produce widgets, and that the production function for widgets is given by
Suppose that The Acme Widget Co. uses capital (K) and labor (E) to produce widgets, and that the production function for widgets is given by Q=K1/3E1/2. Suppose that r=$1 and w=$4, where r is the price of capital and w is the wage rate. Finally, suppose also that the price of widgets, p, is $8.
Derive the marginal product of labour (MPE ) and the marginal product of capital (MPK). Clearly show your work.
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