Suppose the production function for widgets is given by q = kl - 0.8k2 - 0.2l2 where q represents the annual quantity of widgets produced, k represents annual capital input, and l represents annual labor input. a. Suppose k = 10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many widgets are produced at that point? b. Again assuming that k = 10, graph the MPl curve. At what level of labor input does MPl = 0? c. Suppose capital inputs were increased to k = 20. How would your answers to parts (a) and (b) change?
Suppose the production function for widgets is given by
q = kl - 0.8k2 - 0.2l2
where q represents the annual quantity of widgets produced, k
represents annual capital input, and l represents annual labor
input.
a. Suppose k = 10; graph the total and average productivity of labor curves. At what level of labor input does this
average productivity reach a maximum? How many widgets are produced at that point?
b. Again assuming that k = 10, graph the MPl curve. At what level of labor input does MPl = 0?
c. Suppose capital inputs were increased to k = 20. How would your answers to parts (a) and (b) change?
d. Does the widget production function exhibit constant, increasing, or decreasing returns to scale?
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