Consider the following production function for shirts: q = v6 L3/4K1/4, where L is worker-hours, and K is sewing machine-hours. a. Compute the marginal products of labor and capital, the average product of labor, and the marginal rate of technical substitution of labor for capital (i.e. how many units of capital are needed to make up for the loss of one unit of labor)? b. Are there diminishing returns to labor (that is, does the marginal product of labor decrease when labor L increases)? What about to capital? c. Is there diminishing marginal rate of technical substitution (MRTS)?

Consider the following production function for shirts: q = v6 L3/4K1/4, where L is worker-hours, and K is sewing machine-hours. a. Compute the marginal products of labor and capital, the average product of labor, and the marginal rate of technical substitution of labor for capital (i.e. how many units of capital are needed to make up for the loss of one unit of labor)? b. Are there diminishing returns to labor (that is, does the marginal product of labor decrease when labor L increases)? What about to capital? c. Is there diminishing marginal rate of technical substitution (MRTS)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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