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?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.2P

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