Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

There are two companies producing mugs, Ceramic and Tile. The production 0.5 0.5 function of mugs for Ceramic is given by ?? = 10? ?

There are two companies producing mugs, Ceramic and Tile. The production 0.5 0.5 function of mugs for Ceramic is given by ?? = 10? ? and Tile's production function of 0.6 0.5 mugs is given by ?? = 20? ? , where ? is hours of machine time and ? is hours of labour employed. a) Using a graph show how, ceteris paribus, an improvement in technology would affect Ceramic's production function. b) If both companies use the same amount of capital and labour, which one generates more output? Explain. c) Find the marginal product of capital and the marginal product of labour for each company. d) Assume that ? = ? = 2,000. Which company will benefit the most from increasing its labour? Which company will benefit the most from increasing its capital? Why? e) Show what type of returns to scale is each company exhibiting

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Basic Statistics

Authors: Charles Henry Brase, Corrinne Pellillo Brase

6th Edition

9781111827021

Students also viewed these Economics questions