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Unformatted text preview: L K K q L q RTS = = = = ∂ ∂ ∂ ∂ = +-RTS = K/L = 25/400 = 0.0625 3. (a) a a a b a L L K b L bK L bK L q MP ) ( 1 = = = ∂ ∂ =--b b b b a K K L a L aK L aK K q MP ) ( 1 = = = ∂ ∂ =--(b) When L increases the denominator increases in the expression for marginal productivity of capital. This lowers K/L ratio thereby reducing the marginal productivity of labor. Similarly from the marginal productivity expression for capital, when capital increases, it decreases the L/K ratio, thereby reducing marginal product of capital. L K Slope = RTS 3 (c) ) ( ) ( ) ( ) ( ) ( ) ( L K a b L K a b L K a L K b K L a L K b dK q dL q RTS b a b a b a = = = = ∂ ∂ = +-...
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- Spring '08
- Economics, Marginal product, 1 lb, 2 K, 2 k, 1 K