Econ501aH3S07 - rm has the production function of problem 1...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
The Ohio State University Department of Economics Econ 501.02 Prof. James Peck Homework #3 (due Wednesday May 9) 1. Consider the following production function x = 5 KL K + L . (a) Find an expression for the marginal rate of technical substitution. (b) Find expressions for the average and marginal products of labor. (c) Does this production function exhibit decreasing, constant, or increasing returns to scale? 2. Suppose the fi rm has the production function of problem 1, x = 5 KL K + L , and that input prices are given by w = 4 and r = 1 . (a) Find the conditional demands for K and L, as a function of x. (b) What is the fi rm’s long run average cost function? 3. Suppose the fi rm has the production function of problem 1,
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: rm has the production function of problem 1, x = 5 KL K + L , and that input prices are given by w = 4 and r = 1 . Also suppose capital is f xed at 4 units, K = 4 . (a) Compute the f rm’s short run average total cost, average variable cost, and marginal cost functions. (b) (This is challenging. Don’t spend too much time on this.) First f nd the value for x that minimizes short run average total cost. Now substitute that value of x into the following functions, and show that they take on the same value: short run average total cost, short run marginal cost, and long run average total cost. 1...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern