Suppose life expectancy in years (L) is a function of two inputs, health expenditures (H) and nutrition expenditures (N) in nundreds of dollars per year. The production function is L=CHO 40N0.60 Beginning with a health input of $300 per year (H = 3) and a nutrition input of $500 per year (N=5), show that the marginal product of health expenditures and the marginal product of nutrition expenditures are both decreasing. The change in the marginal product of health expenditures (MPH) is AMPH %3D ΔΗ and the change in the marginal product of nutrition expenditures (MPN) is AMPN %3! AN

Suppose life expectancy in years (L) is a function of two inputs, health expenditures (H) and nutrition expenditures (N) in nundreds of dollars per year. The production function is L=CHO 40N0.60 Beginning with a health input of $300 per year (H = 3) and a nutrition input of $500 per year (N=5), show that the marginal product of health expenditures and the marginal product of nutrition expenditures are both decreasing. The change in the marginal product of health expenditures (MPH) is AMPH %3D ΔΗ and the change in the marginal product of nutrition expenditures (MPN) is AMPN %3! AN

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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