Chapter 6 Key

Chapter 6 Key - Chapter 6 Homework Please answer all...

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Chapter 6 Homework Due: March 15, 2007 Please answer all questions on this handout. 1. Fill in the spaces in the following table: Number of Trucks Amount of Labor Total Output Average Product of Labor Marginal Product of Labor 2 0 0 ---- ---- 2 1 75 75 75 2 2 200 100 125 2 3 300 100 100 2 4 380 95 80 2 5 430 86 50 2 6 450 75 20 Remember: L Q AP L Q MP L L = = 2. Graph the total product curve in the following space: 0 50 100 150 200 250 300 350 400 450 500 0 1 2 3 4 5 6 7 Labor Outpu 1
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Does this function exhibit diminishing marginal returns? Explain how you know this. Yes. From the slope, we can see that at first it increases at an increasing rate and then increases at an increasing rate. In other words, the marginal product of labor increases reaches a maximum and then starts decreasing. 3. Define an isoquant. What is measured on the axes of a diagram with isoquants? What is the relationship between an isoquant map and the production function? Please answer in the space below. An isoquant is a line that shows all combinations of labor and capital that can produce the same level of output. We place physical units of labor and capital on the x and y axis of an isoquant. 4. Assume that the marginal product of each input employed by Microsoft depends only on the quantity of that input employed (and not on the quantities of other inputs see equations 6.2 & 6.3 on page 163 of the text) and both have positive marginal products. Explain why Microsoft’s isoquants must be downward sloping and convex
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This note was uploaded on 05/04/2008 for the course ECON 371 taught by Professor Mcferrin during the Spring '08 term at NMSU.

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Chapter 6 Key - Chapter 6 Homework Please answer all...

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