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To understand aggregate production functions, it sometimes helps to think about an individual firm's production function. Once we understand the general relationship between inputs and
To understand aggregate production functions, it sometimes helps to think about an individual firm's production function. Once we understand the general relationship between inputs and outputs at the firm level, we can scale up this relationship for the aggregate economy. v 1st attempt See Hint Consider a distillery that produces whisky. The main physical limitation on how much whisky can be made by the distillery is the number of stills in operation (the still is the piece of equipment that actually does the distilling). Suppose the distillery can produce the following amount of whisky depending on how many stills it uses: Number of stills used Barrels of whisky per week 0 O 2 3.0 4 6.0 6 8.0 8 9.0 Calculate the marginal product for each still (give your answer to one decimal): first still: barrel(s) fourth still: barrel(5) sixth still: barrel(s) eighth still: barrel
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