JOE CRAIG 5

# JOE CRAIG 5 - Economics 3070-001 Spring 2008 Problem Set 5...

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Economics 3070-001 Spring 2008 Problem Set 5 (Due March 5 th ) 1. Suppose that the production function for lava lamps is given by , where  Q  is the number of lamps produced per year,  K  is the machine-hours of capital,  and  L  is the man-hours of labor. Suppose  K  = 600. a. Draw a graph of the production function over the range  L  = 0 to  L  = 500, putting  L  on the horizontal axis and  Q  on the vertical axis.  Over what range of  L  does the  production function exhibit increasing marginal returns?  Diminishing marginal  returns?  Diminishing total returns? b. Derive the equation for average product of labor and graph the average product of  labor curve.  At what level of labor does the average product curve reach its  maximum? c. Derive the equation for marginal product of labor.  On the same graph you drew  for part b, sketch the graph of the marginal product of labor curve.  At what level

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## This note was uploaded on 05/04/2008 for the course ECON 3070 taught by Professor Loh,joyce during the Spring '07 term at Colorado.

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JOE CRAIG 5 - Economics 3070-001 Spring 2008 Problem Set 5...

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