Suppose a firm uses capital K and labor L to produce output Q with the following production function: +²1² 3 = 4KL + (a) Find the marginal product of capital and the marginal product of labor. (b) Find the average production of capital and the average production of labor. (c) Does this production function have increasing, constant, or decreasing returns to scale? Explain.
Suppose a firm uses capital K and labor L to produce output Q with the following production function: +²1² 3 = 4KL + (a) Find the marginal product of capital and the marginal product of labor. (b) Find the average production of capital and the average production of labor. (c) Does this production function have increasing, constant, or decreasing returns to scale? Explain.
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 7E
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![Suppose a firm uses capital K and labor L to produce output Q with the following production function:
1
Q=4KL + = 1²
3
(a) Find the marginal product of capital and the marginal product of labor.
(b) Find the average production of capital and the average production of labor.
(c) Does this production function have increasing, constant, or decreasing returns to scale? Explain.
(d) Find the marginal rate of technical substitution (RTS).
(e) Use your result in (d) to find the elasticity of substitution.
(f) Find the contingent demand functions for capital and labor if w is the price of labor input and v is the
price of capital input.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6035f1a2-2c03-490a-9469-88f7b64e730f%2F245f68eb-9726-4454-99cb-da386488629b%2Ffmho3za_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose a firm uses capital K and labor L to produce output Q with the following production function:
1
Q=4KL + = 1²
3
(a) Find the marginal product of capital and the marginal product of labor.
(b) Find the average production of capital and the average production of labor.
(c) Does this production function have increasing, constant, or decreasing returns to scale? Explain.
(d) Find the marginal rate of technical substitution (RTS).
(e) Use your result in (d) to find the elasticity of substitution.
(f) Find the contingent demand functions for capital and labor if w is the price of labor input and v is the
price of capital input.
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