Consider the production function Q = 2(KL)0.5 What is the marginal product of labour and capital What is the marginal rate of technical substitution of labor for capital What is the elasticity of substitution at a point K = 1, L = 1 if we increase K by one unit?

Consider the production function Q = 2(KL)0.5 What is the marginal product of labour and capital What is the marginal rate of technical substitution of labor for capital What is the elasticity of substitution at a point K = 1, L = 1 if we increase K by one unit?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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Question

Consider the production function Q = 2(KL)0.5

What is the marginal product of labour and capital

What is the marginal rate of technical substitution of labor for capital

What is the elasticity of substitution at a point K = 1, L = 1 if we increase K by one unit?

Definition Definition Rate at which one factor of production is decreased in order to maintain the same level of output when another factor of production is increased. MRTS allows for the substitution between factors of production: labor (L) and capital (K) in order to maintain a given level of output.

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