ECO303.02 Recitation #3
1) Laura's Internet Services firm can design computer systems according to the
function
y(K, L) =
3
K
L
, where
K
is the amount of Gigabyte storage she has available and
L
is the amount of labor hours she employs.
Currently, Laura has 125 gigabytes of
storage.
Sketch the change in the marginal product of labor curve for Laura's firm
for values of
L = 1, 2, 3, 4, and 5, if she increases her gigabyte storage capacity to
216.
Answer:
We can approximate the change in the marginal product of labor as
indicated in the following table.
The marginal product of labor has increased when
Laura added additional storage capacity.
A sketch of the marginal product of labor is
2) Bridget's Brewery production function is given by y(K, L) =
2
KL
, where
K
is the
number of vats she uses and
L
is the number of labor hours.
Does this production
process exhibit increasing, constant or decreasing returns to scale?
Holding the
number of vats constant at 4, is the marginal product of labor increasing, constant or
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
ECO303.02 Recitation #3
This is the end of the preview.
Sign up
to
access the rest of the document.
 Fall '08
 YunShanChan
 Microeconomics, Marginal product, Economics of production

Click to edit the document details