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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 Fall '07
 REAGAN
 Economics, Economics of production, rental rate

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