Question2 Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function: q = f(L, K) = [aLº + BK²] Where a = B=0.5.y = 1.p = 2. a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this CES function have constant, increasing, or decreasing returns to scale?

Question2 Imagine you work for a firm that only utilizes labor and capital as inputs and has a CES production function: q = f(L, K) = [aLº + BK²] Where a = B=0.5.y = 1.p = 2. a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this CES function have constant, increasing, or decreasing returns to scale?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.8P

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Question2 Imagine that you own a company that is a price taker with the production function: q= = f(L, K) = L0.25 K0.75 a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this production function have constant, increasing, or decreasing returns to scale? e. What is the short run supply function for the firm? f. What is the derived labor demand for the firm? g. What is the price elasticity of supply? What does this mean economically? h. How does supply shift when the price of labor changes? What does this mean economically? i. What is the price elasticity of labor demand? What does this mean economically? j. How does derived labor demand change when the price of labor changes? What does this mean economically?
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MCQ 45 Suppose the production function exhibits constant returns to scale, with diminishing marginal productivities for both capital and labour. For this function, we would expect a fall in employment and an increase in the capital stock to generate: A a fall in the marginal product of labour and a fall in the marginal product of capital I do not want to answer this question. a fall in the marginal product of labour, but the change in the marginal product of capital can't be determined from the information provided D a rise in the marginal product of labour and a fall in the marginal product of capital E a rise in the marginal product of labour and a rise in the marginal product of capital F a fall in the marginal product of labour and a rise in the marginal product of capital
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A firm is currently producing such that: MPL = 30 W = 10 MPK = 20 To minimize the cost of production, this firm should: a. Use more labor and less capital which will (likely) decrease the MPL b. Use more labor and less capital which will (likely) increase the MPL C. Use less labor and more capital which will (likely) decrease the MPK Od. Use less labor and more capital which will (likely) increase the MPK v = 20
Sean la función de producción Q(K, L) 23 625 (Ki + Ki + 4 Li) , que depende de las cantidades 7. utilizadas de los inputs K y L, y sea el punto (K,L)= (2,4). (a) ¿Cuál es el efecto sobre la producción de un aumento de una unidad en la cantidad utilizada del input L, ceteris paribus? (b) ¿Cuál es el efecto sobre la producción de un aumento de un 1% en la cantidad utilizada del input L, ceteris paribus?
5. Suppose the production function is given by f(E, K) = E'/³K²/3. The hourly wage rate is $2 and the price for a unit of capital is $32. The output level is ĝ = 144 and the price of the output is $30. (a) Write a firm's CMIN problem. (b) Impose FONC to find MP(E) = w and MP(K) = r. %3D
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Question1 Imagine you own a firm with the production function q=f(L,K) = Lº.2 K0.8 a. What is the MPL ? What does this mean economically? b. What is the MPK ? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this production function have constant, increasing, or decreasing returns to scale?
5. A company that produces auto parts has a production function of Q = 300 L-75 K-5. %3D If L= 250 and K= 25, what is the output of auto parts? If L increases to 350, what is the output of auto parts? What does the change in output show regarding labor as a factor of production?