TUTORIAL 6 [Production Function with Two Variables Input] 1. The table below demonstrates how much output a company can produce utilising two different types of inputs: labour and capital. INPUTS OUTPUT LABOR CAPITAL 50 6 2 a. Is the company operating on a short-tenn or longterm basis? Why? b. Determine the range of output when the companyr encounters: i. Increasing scale returns; ii. Decreasing scale returns; iii. Constant returns to scale _ 2. The table below shows the output quantities that can be produced by a rm using 1liarious amounts of capital (K) and labour (L). \f3. Determine the marginal and average capital products for L = 3 units, with K ranging from 1 to 6 units. b. Determine the marginal and average labour products for K = 1 units with L ranging from 1 to 6 units. c. Assume the companyr produces 37 units o1 product with one unit of capital and three units of labour. Labor costs RM1U, while capital costs RMZO. Is the company combining inputs at the lowest possible cost? Why? Assume that the marginal product of the last worker employed by a firm is 40 units of output per day, with a daily wage of RM2U. and that the marginal product of the last machine rented by the rm is 120 units of output per day, with a daily rented price of RMSOI. a. What are the long-tenn conditions for the best inputs combination? b. Is this company's long-term goal to maximise output or cut costs? Explain. b. How can the company increase output while towering cosh