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solutions3[1]

# solutions3[1] - EC201 Fall 2007 Prof Jordi Jaumandreu...

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EC201, Fall 2007, Prof. Jordi Jaumandreu Solutions to Problem set #3 Production Function 1. Total product: up to 6 workers a line with 45 o inclination, from 6 workers on a horizontal line hitting the y-axis at 6; Average product of labor: up to 6 workers a horizontal line at the value 1, fron 6 workers on a continuously decreasing line (with value AP L = 6 L ); Marginal product of labor: up to 6 workers a horizontal line at the value 1, from 6 workers on the x-axis (marginal product is zero). 2. a. The isoquants have right angles on the ray with a slope 2. If we fi x capital at 12, we will have exactly the Total product, Average product and marginal product curves of the previous problem. 3. (ATTENTION: there is a typo in this problem in the textbook -problem 10 at page 175- production function must be q = B + 1 2 G ) Solving for G we have G = 2 q 2 B that allows one to depict the isoquant corresponding to any q. The marginal product of B is MP B = q B = 1 . The marginal rate of technical

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