PS_CH06 - ECON2296-PracticeQuestionsChapter6 1. A firm's...

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ECON 2296  -  Practice Questions Chapter 6 1. A firm's production function is Q = 50L 2 - L 3 . a) What is the marginal product of labour (MP L )? b) What is the average product of labour (AP L )? c) At what level of labour use do diminishing returns begin? Show work. d) At what level of labour use does labour productivity begin to diminish? e) At what level of labour use is total output maximized? 2. A firm's production function is Q = L 1/2 K 1/2 . a) Draw the isoquant Q = 10. Identify three specific bundles on this isoquant. b) Determine the marginal product of labour (MP L ), the marginal product of capital (MP K ), and the marginal rate of technical substitution (MRTS) at each of the three bundles in part (a). 3. A firm's production function is Q = min {2L, 5K}. a) Draw the isoquant Q = 10. Identify three specific bundles on this isoquant. b) What is the marginal product of labour (MP L ) if the firm is using input bundle (L,K) = (6,2)? c) What is the marginal product of labour (MP L ) if the firm is using input bundle (L,K) = (6,4)? d) Does the firm's production exhibit increasing, decreasing, or constant returns to scale? 4. A firm's production function is Q = 2L + 6K. a) Draw the isoquant Q = 24. Identify three specific bundles on this isoquant. b) What is the marginal product of labour (MP L ), the marginal product of capital (MP K ), and the marginal rate of technical substitution (MRTS)? 5. Determine the marginal product of labour (MP L ), the marginal product of capital (MP K ),the marginal rate of technical substitution (MRTS), and the returns to scale for each of the following production functions. a) Q = L
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This note was uploaded on 09/25/2010 for the course ECON Econ 2296 taught by Professor W.graygiovannetti during the Fall '10 term at Langara.

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PS_CH06 - ECON2296-PracticeQuestionsChapter6 1. A firm's...

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