Econ 100B: Tang
Spring Quarter 2008
Homework 2: Ch 6 and Ch 7
Due Thursday April 17, at the beginning of class.
Please write your name and PID on your homework.
1) Say the production function for a foam fingers is given by:
3
3
2
2
600
L
K
L
K
q

=
.
If K=1, over what range of L will the function have diminishing marginal product of
labor?
2) Say the production function for stuffed penguins is given by:
2
2
2
.
8
.
L
K
KL
q


=
a. Graph the total and average product of labor curves if K=10.
Find the
level of labor that maximizes average product and the number of stuffed
penguins produced with that level of labor.
b. Graph the marginal product of labor curve, again assuming K=10.
Find
the level of labor where MP
L
=0.
c. How would your answers change if K=20?
d. Does the function exhibit decreasing, constant, or increasing returns to
scale?
3) Say a firm’s production function is given by: q=min(5K,10L), and that rental
rates for capital is r=1, and the wage for labor is w=3.
Suppose that K=10 in the
short run.
Calculate the firm’s shortrun total, average, and marginal cost curves.
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 Winter '07
 RAUCH
 Economics, Microeconomics, Economics of production, Professor Ta

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