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ECON501HW3-1

# ECON501HW3-1 - ECON501 Professor Reagan Homework#3 1...

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ECON501 Professor Reagan Homework #3 1. Complete the following table: Quantity of variable input Total output Marginal product of variable input Average product of variable input 0 0 - - 1 50 2 30 3 90 4 24 5 4 6 96 2. Labor input Capital input 1 2 4 8 16 1 1 2 2 8 4 2 2 2 8 4 4 2 4 2 8 4 4 2 8 8 8 4 4 2 8 8 2 16 4 4 2 8 8 2 16 a. Draw the isoquant associated with a constant output equal to 4. b. Does the isoquant display a diminishing marginal rate of technical substitution? c. If capital is fixed at 4 units, does the production function display diminishing marginal returns to labor? d. The marginal product of labor is L K MP L 2 = , while the marginal product of capital is K L MP K 2 = . What is the expression for the marginal rate of technical substitution? e. Draw the isoquants at output equal to 2, 4, and 8. Does the production function display constant returns to scale when all factors are variable? 3. A firm’s total cost function is given by the equation: 2 10 5 4000 Q Q TC + + = (i)

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