(b)- The production funeaKTor laptops of Patel is given by q = 10K°5 L°Swhere q is number of laptops produced per day, K is hours of machine time andL is labour hours. Patel's competitor Manish is using the production functionq = 10K L4.(i)If both companies use the same amount of capital and labor, which willgenerate more output?(i1)Assume that capital is limited to 9 machine hours, but labour is unlimitedin supply. In which company is the marginal product of labor greater?Explain.

The function of production in economics is to show an equation used between the number of factors of production (for example labor and capital) and the quantity of output received. It can also be used to determine the free combination of production elements that can be used to create a particular product.(i) Let q1 = 10K^0.5 L^0.5 and q2 = 10K^0.6 L^0.4 Let, m = q1/q2 m = (10K^0.5 L^0.5)/10K^0.6 L^0.4 = L/K So, if L > K, m > 1 and q1 > q2 and if, L < K, m < 1 or q1 < q2 and if, L = K, m = 1 or q1 = q2 (ii) MPL = dq/dL MPL1 = dq1/dL = 10*0.5K^0.5L^(-0.5) = 5(K/L)^0.5 MPL2 = dq2/dL = 10*0.4(K/L)^0.6 = 4(K/L)^0.6 MPL1/MPL2 = (5/4)*(L/K) = 1.25(L/K) presently, since L is accessible in limitless amount and K is covered at 9, given generally capital is utilized, this proportion will watch out for vastness as L goes past 9/1.25, and MPL of firm 1 will be more prominent then firm 2 In any case, assuming L remaining parts lesser that 9/1.25, or in the event that K = k' < 9, and L < k'/1.25, then, at that point, MPL of firm 2 will be more noteworthy.

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(b) The production funeaTor laptops of Patel is given by q = 10K° L°S where is number of laptops produced per day, K is hours of machine time and L is labour hours. Patel's competitor Manish is using the production function q = 10K L4 %3D If both companies use the same amount of capital and labor, which will generate more output? (i) Assume that capital is limited to 9 machine hours, but labour is unlimited in supply. In which company is the marginal product of labor greater? Explain. (ii)

(b) The production funeaTor laptops of Patel is given by q = 10K° L°S where is number of laptops produced per day, K is hours of machine time and L is labour hours. Patel's competitor Manish is using the production function q = 10K L4 %3D If both companies use the same amount of capital and labor, which will generate more output? (i) Assume that capital is limited to 9 machine hours, but labour is unlimited in supply. In which company is the marginal product of labor greater? Explain. (ii)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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