If the production function for GDP is Cobb-Douglas in labour and capital, with the exponent on capital isa space equals space 1 third, and assuming constant returns to scale, and a perfectly competitive goodsmarket a. The marginal product of labour (vertical axis) will have a positive, concave slope when plottedagainst labour (horizontal axis) b. In equlibrium, wage will equal 2 over 3 y, where y is output per workerc. Labour and capital are complements so the derivative fraction numerator d squared Y overdenominator d L d K end fraction less than 0 d. None of the answers is correct e. The marginal productof labour is: left parenthesis 1 minus a right parenthesis A open parentheses Lover K close parenthesesto the power of a

The objective of the question is to understand the properties of the Cobb-Douglas production…

Answered: If the production function for GDP is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider the following production function: f (A, B) = gamma multiply A^alpha multiply B^Beta. where A and B are the inputs and alpha, Beta, gamma are in the set (0,1). Let wA and wB the price of the two inputs. Assume wA, wB > 0. Is the production function separable?Does the production function exhibit constant returns of scale?Compute the cost function and the conditional input demand function.How do these three functions react to a change in wA? Suppose the price of both inputs double, what happens to the conditional input demand function? And to the cost function? Suppose the desired level of output double, what happens to the conditional input demand function? And to the cost function?…
Suppose that the economy's production function is given by Y=K²N¹-a where Y is output, K is capital, and N is labor. Assume that a = 1/3. The production function transformed into output per worker is (Property format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with N character.)
Consider the production function Y=K1/2 N1/2 a. Compute output when K=37 and N=80 b. If both capital and labour double, what happens to output? c. Is this production function characterized by constant returns to scale? Explain. d. Are there decreasing returns to capital? Explain. e. Are there decreasing returns to labour? Explain. f. Write this production function as a relationship between output per worker and capital per worker. Show all your work. g. Let capital per worker be 6. What is output per worker? Now, double capital per worker to 12. Does output per worker more or less than double? h. Does the relation between output per worker and capital per worker exhibit constant returns to scale? Explain/show your work
in an economy with production function Y = 1.5 × K^0.3L^0.7, K = 343, and L = 512. If factor markets are in equilibrium, then the rental price of capital is (approximately) ________, and the real wage is (approximately) ________. A) 0.5; 0.8 B) 7; 8 C) 0.9; 1.35 D) 1.4; 0.4 E) 0.6; 0.9
Consider a production function Q-AL KP (00 None of the other answers are correct.
From the following production functions 1. Q= a1H + a2L + a3H2 + a4 L2 + a5HL, where ai> 0 2. Q = aH@ Ly, where a, @, y > 0 a. Derive the equation of the relevant isoquant. b. Find out whether the production function is well behaved. c. Examine whether the isoquant is well behaved and therefore represents the behaviour of a rational production. d. Derive equation which describes MRTS of 9ne factor. e. For each equation examine whether the production is homogeneous and if so, what is the degree of homogeneity. Is the equation characterized by IRTS, DRTS or CRTS.
The Cobb-Douglas production function is a classic model from economics used to model output as a function of capital and labor. It has the form f(L, C)=²1C²2 where co. ₁, and care constants. The variable L represents the units of input of labor and the variable C represents the units of input of capital. (a) In this example, assume co5, c, 0.25, and c₂-0.75. Assume sach unit of labor costs $25 and each unit of capital costs $75. With $70,000 available in the budget, devalop an optimization model for determining how the budgeted amount should be allocated between capital and labor in order to maximize output. Max s.t. L, CZO € 70,000 (b) Find the optimal solution to the model you formulated in part (a). What is the optimal solution value (in units)? (Hint: When using Excel Solver, use the bounds 0S LS 3,000 and 0 s Cs 1,000. Round your answers to the nearest integer when necessary.) units at (L. C)=(
The Cobb-Douglas production function with output Q and capital and labor inputs K and L, respectively, is given by: Q = f(K,L) = K«LB where 0 < a <1 and 0
Consider the following production function: q = 9LK + 6L² – Assuming capital is measured on the vertical axis and labor is measured on the horizontal axis, determine the value of the marginal rate of technical substitution when K= 30 and L= 10. MRTS = -. (Enter a numeric response using a real number rounded to two decimal places.) 20 tv MacBook Air F6 FB 10 F3 23 2$ & з 4 6 7 8 { [ E Y U P D F G J K > C V N M command option - .. .- B
Consider the following production function that depends only on labor:Q = 4L + 12L² - 6L³ 1. Compute the APL (average product of labor). 2. Compute the MPL (marginal product of labor). 3. What is the value of L* at which APL is the highest? 4. For L > L*, which one is bigger, APL or MPL? How about when L < L* and L = L*? 5. Draw APL and MPL on the y-axis as a function of L on the x-axis. Label the point of the intersection of APL and MPL.
In economics and econometrics, the Cobb-Douglas production function is a particular functional form of ne production function, widely used to represent the technological relationship between the amounts of two r more inputs (particularly physical capital and labor) and the amount of output that can be produced by nose inputs. The function they used to model production is defined by, P(L, K) = 6LªK!-a where P is the total production (the monetary value of all goods produced in a year), L is the amount f labor (the total number of person-hours worked in a year), and K is the amount of capital invested (the onetary worth of all machinery, equipment, and buildings). Its domain is {(L, k)|L > 0, K > 0} because L nd K represent labor and capital and are therefore never negative. Show that the Cobb-Douglas production function can be written as P P(L, K) = 6LªK1-a → In K L In b+ a ln K
Answer the Constrained Optimization: Cobb-Douglas Production Function:3. Solve for the formulas of the Marginal Product of Labor (MPL), and Marginal product of Capital (MPK)4. Using your knowledge of the tangency condition in Producer’s theory, find the combination of K and L that the firm should use to produce the maximum possible output. Do not solve the problem using the Lagrangian method.Note: The tangency conditions just states that the slope of the production function must beequal to the slope of the isocost function.5. What is the maximum possible output that the firm could earn given the constraint it faces

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press

Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press

Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education

SEE MORE TEXTBOOKS