Problem Set 5
THEORY OF PRODUCTION
a. If a firm’s production function is given by F(L,K) =
, which is larger
(8, 8) or AP
a. What is the MRTS of the function F(L,K)= L
b. Does this function exhibit diminishing MRTS?
c. Does this function exhibit increasing returns to scale?
(9, 20) =3 and AP
(9,20) = 6.
a. Is AP
(9,20) smaller than, larger than, or equal to AP
b. Is AP
(9, 20) smaller than, larger than, or equal to AP
(L, K) is always 17K.
a. What is F(L,K)?
b. What is MP
c. Does F(L,K) exhibit diminishing MRTS?
If MRTS(L,K) is always 3/2, draw the isoquants of F(L,K).
Let F(L,K) = 5LK. When K rises does MP
rise or fall? Can you think of a reason
why this might be a good description of a real firm’s production?
My firm digs ditches. Its production inputs are workers and shovels and its output,
measured in cubic feet per day, is ditches. Each worker needs a shovel (the ground is