Theory QUESTIONS (1) Given CD PF of - If A = 25, and a = Q = AK“L-a || /2 %3D - Determine: - AP = TP/L - MPL= dTP/ƏL - MPK = dTP/ƏK %3D %3D - (2) Given a PF of the type - Determine: - AP = TP/L - MPL= dTP/ƏL - MPK = dTP/dK Q = AK" + L'a %3D %3D (3) If in (1) above, A = 100, a = 0.6, K = 25, and L= 100, determine MPL, MPK, APL, APK and TP. %3D %3D
Theory QUESTIONS (1) Given CD PF of - If A = 25, and a = Q = AK“L-a || /2 %3D - Determine: - AP = TP/L - MPL= dTP/ƏL - MPK = dTP/ƏK %3D %3D - (2) Given a PF of the type - Determine: - AP = TP/L - MPL= dTP/ƏL - MPK = dTP/dK Q = AK" + L'a %3D %3D (3) If in (1) above, A = 100, a = 0.6, K = 25, and L= 100, determine MPL, MPK, APL, APK and TP. %3D %3D
Chapter3: Scarcity, Trade-offs, And Production Possibilities
Section: Chapter Questions
Problem 13P
Related questions
Question
![• Any point below the PS characterizes inefficiency.
Theory of Production...
QUESTIONS
(1) Given CD PF of
• If A = 25, and a = /,
Q = AK" L'-a
Determine:
AP = TP/L
MP,= dTP/ƏL
MPK = dTP/ƏK
(2) Given a PF of the type
1-a
Determine:
Q = AK" + L"
• AP = TP/L
• MP,= dTP/ƏL
MPK = dTP/ƏK
%3D
(3) If in (1) above, A = 100, a = 0.6, K = 25, and L= 100,
determine MPL, MPK, AP, APK and TP.
%3D
Theory of Production..
(4) Suppose a production function is represented by
Q = F(K,L) = 600K²L² - K3L3
• To construct MP, and AP, assume that K = 10
• The production function becomes
q = 60,000l2 - 10ool3
Q = 60,000L? - 1000L3
The marginal productivity function is
MPL = dTP/dL = 120,000L - 30ooL? which diminishes as L increases
• This implies that Q has a maximum value:
• 120,000L - 30ooL? = 0; 40L = L2; L = 40
• Labour input beyond L= 4o reduces output.
• To find average productivity, we hold K=10 and solve AP, = Q/L = 60,000L
1000L?
• AP, reaches its maximum where ô APL/L = 60,000 - 2000L = 0; L = 30
• In fact, when L = 30, both APL and MPL are equal to 900,000
%3D
• Thus, when AP_ is at its maximum, AP, and MP are equal
Theory of Production...
Long Run production function
• The long run is a period sufficiently long that all inputs of
production including capital can be adjusted or are all variables.
Long-run production function therefore shows the maximum
quantity of output that a firm can be produced using a set of
inputs with the assumption of varying all inputs.
• With this the firm can choose any combination of inputs for
production.
• One approach to choosing the optimal (least costly) mix of inputs
is to compare the (marginal) cost of producing one extra unit of
output across different inputs.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F84cacf27-6ab9-47a5-ba02-57489858e2f6%2F0df41cfe-f674-48bf-99f9-80eea384cf77%2Fi75csqc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:• Any point below the PS characterizes inefficiency.
Theory of Production...
QUESTIONS
(1) Given CD PF of
• If A = 25, and a = /,
Q = AK" L'-a
Determine:
AP = TP/L
MP,= dTP/ƏL
MPK = dTP/ƏK
(2) Given a PF of the type
1-a
Determine:
Q = AK" + L"
• AP = TP/L
• MP,= dTP/ƏL
MPK = dTP/ƏK
%3D
(3) If in (1) above, A = 100, a = 0.6, K = 25, and L= 100,
determine MPL, MPK, AP, APK and TP.
%3D
Theory of Production..
(4) Suppose a production function is represented by
Q = F(K,L) = 600K²L² - K3L3
• To construct MP, and AP, assume that K = 10
• The production function becomes
q = 60,000l2 - 10ool3
Q = 60,000L? - 1000L3
The marginal productivity function is
MPL = dTP/dL = 120,000L - 30ooL? which diminishes as L increases
• This implies that Q has a maximum value:
• 120,000L - 30ooL? = 0; 40L = L2; L = 40
• Labour input beyond L= 4o reduces output.
• To find average productivity, we hold K=10 and solve AP, = Q/L = 60,000L
1000L?
• AP, reaches its maximum where ô APL/L = 60,000 - 2000L = 0; L = 30
• In fact, when L = 30, both APL and MPL are equal to 900,000
%3D
• Thus, when AP_ is at its maximum, AP, and MP are equal
Theory of Production...
Long Run production function
• The long run is a period sufficiently long that all inputs of
production including capital can be adjusted or are all variables.
Long-run production function therefore shows the maximum
quantity of output that a firm can be produced using a set of
inputs with the assumption of varying all inputs.
• With this the firm can choose any combination of inputs for
production.
• One approach to choosing the optimal (least costly) mix of inputs
is to compare the (marginal) cost of producing one extra unit of
output across different inputs.
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