Suppose a farmer is using two inputs, labour (L) and capital (K), to produce the same amount of wheat (i.e. 100 tons of wheat). The production function is given by L0.5 + K0.33 a) Discuss any three (3) characteristics of the model described above. b) Explain how it would be possible for a farmer to use L and K to produce the same amount of wheat. c) Derive MPP of L and MPP of K. d) Determine the marginal rate of substitution of L and K. e) Prove, algebraically, that the Marginal Rate of Substitution (MRS) between L and K is

Suppose a farmer is using two inputs, labour (L) and capital (K), to produce the same amount of wheat (i.e. 100 tons of wheat). The production function is given by L0.5 + K0.33 a) Discuss any three (3) characteristics of the model described above. b) Explain how it would be possible for a farmer to use L and K to produce the same amount of wheat. c) Derive MPP of L and MPP of K. d) Determine the marginal rate of substitution of L and K. e) Prove, algebraically, that the Marginal Rate of Substitution (MRS) between L and K is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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