Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where q is the number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to APL = MPL = 5K. Does labor exhibit diminishing marginal returns in this case? O No, the marginal product of labor is constant (for a given K). O No, the marginal product of labor is increasing (for a given K). O Yes, if capital also exhibits diminishing marginal returns. O Yes, this is true for all values of K.
Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where q is the number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to APL = MPL = 5K. Does labor exhibit diminishing marginal returns in this case? O No, the marginal product of labor is constant (for a given K). O No, the marginal product of labor is increasing (for a given K). O Yes, if capital also exhibits diminishing marginal returns. O Yes, this is true for all values of K.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning