1) Suppose the production function for widgets is given by: q= KL – 0.8K² – 0.2L². a.) Suppose K=10, at what level of labor input does this AP1reach a maximum and how many widgets are pIDduced at that point? At what level of labor input does MP1=0 and how many widgets are produced at that point? Graph the TPı, AP1 and MP1, cuves. b.) Suppose capital inputs were increased to K=20. How would your answers to parts (a) change? c.) Does the widget production function exhibit constant, increasing, or decreasing retums to scale?

1) Suppose the production function for widgets is given by: q= KL – 0.8K² – 0.2L². a.) Suppose K=10, at what level of labor input does this AP1reach a maximum and how many widgets are pIDduced at that point? At what level of labor input does MP1=0 and how many widgets are produced at that point? Graph the TPı, AP1 and MP1, cuves. b.) Suppose capital inputs were increased to K=20. How would your answers to parts (a) change? c.) Does the widget production function exhibit constant, increasing, or decreasing retums to scale?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

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1) Suppose the prdduction function for widgets is given by: q= KL – 0.8K² – 0.2L?.
a.) Suppose K=10, at what level of labor input does this AP1,reach a maximum and how
many widgets are pIdduced at that point? At what level of labor input does MP1=0 and
how many widgets are produced at that point? Graph the TP1, AP1 and MP1 curves.
b.) Suppose capital inputs were increased to K=20. How would your answers to parts (a)
change?
c.) Does the widget production function exhibit constant, increasing, or decreasing
retums to scale?

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