HW 2 - Econ 100B: Tang Homework 2: Ch 6 and Ch 7 Due...

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Econ 100B: Tang Winter Quarter 2009 Homework 2: Ch 6 and Ch 7 Due Thursday January 22, at the beginning of class. 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 short-run total, average, and marginal cost curves. What’s the marginal cost of the 10
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HW 2 - Econ 100B: Tang Homework 2: Ch 6 and Ch 7 Due...

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