Econ302-hw3-summer09 - Econ302 Homework Assignment 3 Due...

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Econ302 Homework Assignment 3 Due Thursday June 4 (Questions 1, 2, and 3 will be graded) Name: 1. For each of the following examples, draw a representative isoquant. What can you say about the marginal rate of technical substitution in each case? a. A firm can hire only full-time employees to produce its output, or it can hire some combination of full-time and part-time employees. For each full-time worker let go, the firm must hire an increasing number of temporary employees to maintain the same level of output. b. A firm finds that it can always trade two units of labor for one unit of capital and still keep output constant. c. A firm requires exactly two full-time workers to operate each piece of machinery in the factory. 1
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2. Do the following functions exhibit increasing, constant, or decreasing returns to scale? What happens to the marginal product of each individual factor as that factor is increased, and the other factor is held constant?
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