# HW 2 Answers - 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. 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 3 1200 L L MP L - = L L MP L 6 1200 - = so L MP will be diminishing when L>200 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. 2 2 . 80 10 L L TP - - = L L AP L 80 2 . 10 - - = Take derivative w/ respect to labor, and set to 0, solve for L to find where AP reaches max. AP is maximized where L=20. Q=40. b. Graph the marginal product of labor curve, again assuming K=10. Find the level of labor where MP L =0. L MP L 4 . 10 - = MP=0 at L=25 c. How would your answers change if K=20? AP is maximized where L=40. Q=160. MP=0 at L=50 d. Does the function exhibit decreasing, constant, or increasing returns to scale?

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## This note was uploaded on 09/07/2009 for the course ECON Econ 100C taught by Professor Tang during the Spring '09 term at UCSD.

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

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