section8 - Department of Economics University of California...

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University of California, Berkeley Econ 100A, Sections 104 and 108 GSI: Ana Rocca Section 8 1 Marginal and average product From the total output curve (which we can graph with labor on the x-axis and output on the y-axis, holding capital fixed) we can derive the average and marginal product of labor curves. Average product (AP) = q/L Marginal product (MP) = ∂q/∂L Exercise: Fill in the blanks with total, average and marginal product: L K q AP L MP L 3 8 33 4 8 9 5 8 4 6 8 7.5 5 As in the utility functions case, here we also have the case of perfect sub- stitutes in production. Exercise: What happens to the MRTS as we go down the isoquant in this case? What happens to the MRTS as we go down the isoquant in the fixed-proportions production function? Exercise: Find the MP L , MP K and MRTS for each of the following exam- ples: f ( L, K ) = 600 L + 4 K f ( L, K ) = 5 L 1 3 K 4 1 These exercises and my notes have benefited enormously from the previous work of Valentina Paredes and other GSI’s. Thanks Valentina! 1
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section8 - Department of Economics University of California...

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