1. The following production function is used to produce wheat, q, from capi- tal, K, and labour, L: q = f(K, L) = a?K/3+ B³L/3 a) Describe the role of a and B in this production function. b) Derive the slope of an isoquant for this production function and in- terpret your result. Draw the isoquant in (K - L) space, labeling where appropriate. The drawing does not need to be exact, but the curvature needs to be approximately correct. Explain why under- standing the curvature is so important. c) Does this production function follow the "Law of Diminishing Marginal Returns"? Show your work and explain your answer.

1. The following production function is used to produce wheat, q, from capi- tal, K, and labour, L: q = f(K, L) = a?K/3+ B³L/3 a) Describe the role of a and B in this production function. b) Derive the slope of an isoquant for this production function and in- terpret your result. Draw the isoquant in (K - L) space, labeling where appropriate. The drawing does not need to be exact, but the curvature needs to be approximately correct. Explain why under- standing the curvature is so important. c) Does this production function follow the "Law of Diminishing Marginal Returns"? Show your work and explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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