4. )At Alan's landscaping firm, labor is fixed in the short run. Increasing his use of capital always leads to additional output and his production function exhibits both increasing and diminishing marginal returns to capital at different points. Using a two-panel diagram, sketch the marginal, average, and total product of canitalat Alan's firm. Your diagram does not need to be to scale, but must be internally consistent and consistent with both the information given and economic theory. Explain your diagram and the relationship between the different curves.

4. )At Alan's landscaping firm, labor is fixed in the short run. Increasing his use of capital always leads to additional output and his production function exhibits both increasing and diminishing marginal returns to capital at different points. Using a two-panel diagram, sketch the marginal, average, and total product of canitalat Alan's firm. Your diagram does not need to be to scale, but must be internally consistent and consistent with both the information given and economic theory. Explain your diagram and the relationship between the different curves.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. What should the firm do if the marginal product obtained from the last dollar spent on capital is smaller than the marginal product derived from the last dollar spent on labor and why? Graphically illustrate.
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3. Production: a. State the decision rules used for finding the optimal amount of input(s) in both short-run and long-run production” b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed: c. The Demand for Labor is the visualization of what important short-run production concept, and what would shift this demand curve to the right? d. Use your answer above to explain why some worker (labor) earn much more than others, and why some workers are at a risk of losing their jobs to machines (capital). e. Explain why a Cobb-Douglas production function such as Q = LaKb s much more realistic than production functions such as Q = aL + bK
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