21 3 3 The productivity of a country is given by f(x,y) = 900xy, where x and y are the amount of labor and capital. (a) Compute the marginal productivities of labor and capital when x = 64 and y = 27. (b) Use part (a) to determine the approximate effect on productivity of increasing capital from 27 to 28 units, while keeping labor fixed at 64 units. (c) What would be the approximate effect of decreasing labor from 64 to 62.5 units while keeping capital fixed at 27 units?

21 3 3 The productivity of a country is given by f(x,y) = 900xy, where x and y are the amount of labor and capital. (a) Compute the marginal productivities of labor and capital when x = 64 and y = 27. (b) Use part (a) to determine the approximate effect on productivity of increasing capital from 27 to 28 units, while keeping labor fixed at 64 units. (c) What would be the approximate effect of decreasing labor from 64 to 62.5 units while keeping capital fixed at 27 units?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 8E

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