1. The production function for the personal computers of DISK, Inc., is given by q = 10K0.5L0.5,where q is the number of computers produced per day, K is hours of machine time, and L ishours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function q = 10K0.6L0.4. a. If both companies use the same amounts of capital and labor, which will generate more output? b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor greater? Explain.
1. The production function for the personal computers of DISK, Inc., is given by q = 10K0.5L0.5,where q is the number of computers produced per day, K is hours of machine time, and L ishours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function q = 10K0.6L0.4. a. If both companies use the same amounts of capital and labor, which will generate more output? b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor greater? Explain.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. The production function for the personal computers of DISK, Inc., is given by q = 10K0.5L0.5,where q is the number of computers produced per day, K is hours of machine time, and L ishours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function q = 10K0.6L0.4.
a. If both companies use the same amounts of capital and labor, which will generate
more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In
which company is the marginal product of labor greater? Explain.
![C O
O X#| C:/Users/huangyil/Downloads/Tutorial%207%.. Q $
1. What is a production function? How does a long-run produIction finction differ from a short-run
production function?
2. Explain the term "marginal rate of technical substitution." What does a MRTS = 4 mean?
3. The production function for the personal computers of DISK, Inc., is given by q= 10KL0s,
where q is the number of computers produced per day, K is hours of machine time, and L is
hours of labor input. DISK's competitor, FLOPPY, Inc., is using the production function
9 = 10KL04
%3D
If both companies use the same amounts of capital and labor, which will generate
more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In
which company is the marginal product of labor greater? Explain.
a.
4. Suppose a chair manufacturer is producing in the short run (with its existing plant and
equipment). The manufacturer has observed the following levels of production corresponding
to different numbers of workers:
Number of
Number of](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49d75491-9517-40da-8edd-d292bd2244be%2Fced0f471-ef1a-4b63-a13d-f65f21bec17d%2Fovvgu2n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:C O
O X#| C:/Users/huangyil/Downloads/Tutorial%207%.. Q $
1. What is a production function? How does a long-run produIction finction differ from a short-run
production function?
2. Explain the term "marginal rate of technical substitution." What does a MRTS = 4 mean?
3. The production function for the personal computers of DISK, Inc., is given by q= 10KL0s,
where q is the number of computers produced per day, K is hours of machine time, and L is
hours of labor input. DISK's competitor, FLOPPY, Inc., is using the production function
9 = 10KL04
%3D
If both companies use the same amounts of capital and labor, which will generate
more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In
which company is the marginal product of labor greater? Explain.
a.
4. Suppose a chair manufacturer is producing in the short run (with its existing plant and
equipment). The manufacturer has observed the following levels of production corresponding
to different numbers of workers:
Number of
Number of
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