ARE100A+2009+PS+6answer - ARE100A INTERMEDIATE...

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ARE100A INTERMEDIATE MICROECONOMICS: THEORY OF PRODUCTION AND CONSUMPTION FALL QUARTER 2009 Problem Set 6 Answer guide 1. Production eggs is E = e(F;H,L,K) where number of eggs produced by the farm depends on tons of Feed; number of Hens: hours of Labor and the amount of Kapital. All inputs other than feed are fixed. The marginal product of feed, indicated by the first partial derivative, is positive: ∂E/∂F > 0 and ∂ 2 E/∂F 2 < 0 (diminishing marginal returns). Draw an example and give functional form. Eggs on vertical, feed horizontal axes. Eggs are an increasing function of feed at a decreasing rate, for example: E = aF 0.5 dE/dF = 0.5aF -0.5 d 2 E/dF 2 = -0.25aF -1.5 2. Feed and hens are variable; labor and Kapital are fixed. Isoquants for weekly output of 12,000 eggs per week and 18,000 eggs per week that are consistent with the idea that each hen need to be fed exactly two pound of feed per week and will yield exactly 6 eggs per week. Label carefully with numbers.
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This note was uploaded on 04/20/2010 for the course ARE 100A taught by Professor Constantine during the Fall '08 term at UC Davis.

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