Suppose a production function is given by the equation Q = LVK. 1. Graph the isoquants corresponding to Q = 10, and Q = 20. 2. MP = √K and MP = 0.5(L/VK). Find the Marginal Rate of Technical Substitution LK (MRTSLK). Do these isoquants exhibit diminishing marginal rates of technical substitution? (Does the slope get flatter as L increases?) 3. The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine hour. What is the equation of the $1500 iso-cost curve?

Suppose a production function is given by the equation Q = LVK. 1. Graph the isoquants corresponding to Q = 10, and Q = 20. 2. MP = √K and MP = 0.5(L/VK). Find the Marginal Rate of Technical Substitution LK (MRTSLK). Do these isoquants exhibit diminishing marginal rates of technical substitution? (Does the slope get flatter as L increases?) 3. The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine hour. What is the equation of the $1500 iso-cost curve?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose a production function is given by the equation Q = LVK.
1. Graph the isoquants corresponding to Q = 10, and Q = 20.
2. MP = √K and MP = 0.5(L/VK). Find the Marginal Rate of Technical Substitution LK
(MRTSLK). Do these isoquants exhibit diminishing marginal rates of technical substitution?
(Does the slope get flatter as L increases?)
3. The cost of labor is w = $5 per labor hour and the cost of capital is r = $15 per machine
hour. What is the equation of the $1500 iso-cost curve?

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Step 1: Define isoquant:

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Step 2: a. Graph the isoquants:

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Step 3: b. Determine the marginal rate and the slope get flatter as L increases or not:

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Step 4: c. Define the equation of the iso-cost curve:

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handwritten of MPL, MPK, and MRTS