The table to the right shows the marginal product of capital and labour for each of several methods of producing 1,000 kilograms of flour per day. a. As we move from A to G, are the production methods becoming more or less capital or labour intensive? OA. It becomes less labour intensive since the MPL rises. OB. It becomes more labour intensive since the MPL rises. OC. It becomes less capital intensive since the MPK rises. OD. It becomes more capital intensive since the MPK falls. O E. Both A and D. Production Method ABCDEFG MPK 18 16 14 12 10 8 6 MPL MOSTHEN 3 6 9 12 15 18 21

The table to the right shows the marginal product of capital and labour for each of several methods of producing 1,000 kilograms of flour per day. a. As we move from A to G, are the production methods becoming more or less capital or labour intensive? OA. It becomes less labour intensive since the MPL rises. OB. It becomes more labour intensive since the MPL rises. OC. It becomes less capital intensive since the MPK rises. OD. It becomes more capital intensive since the MPK falls. O E. Both A and D. Production Method ABCDEFG MPK 18 16 14 12 10 8 6 MPL MOSTHEN 3 6 9 12 15 18 21

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
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d. Calculate the marginal product of capital MPK. e. Calculate the marginal product of labor (MPL).
Consider the production function Y=K1/2 N1/2 a. Compute output when K=37 and N=80 b. If both capital and labour double, what happens to output? c. Is this production function characterized by constant returns to scale? Explain. d. Are there decreasing returns to capital? Explain. e. Are there decreasing returns to labour? Explain. f. Write this production function as a relationship between output per worker and capital per worker. Show all your work. g. Let capital per worker be 6. What is output per worker? Now, double capital per worker to 12. Does output per worker more or less than double? h. Does the relation between output per worker and capital per worker exhibit constant returns to scale? Explain/show your work
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In each blank type increasing, decreasing or constant to describe the returns to scale of the given production function. 1 a. The production function Q 3 = 3L°K exhibits returns to scale. b. The production function Q = LK? exhibits c. The production function Q = 3L +K exhibits returns to scale. %3D returns to scale.
Suppose the inputs of labour and capital each increase by 8% and output also increases by 8%. The production function exhibits_ returns to scale technology. a. Constant O b. Increasing O c. Decreasing O d. Zero