tut 7 - TUTORIAL 7 on chapters 9 and 10 (hand in questions...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
(hand in questions 2 and 4) 1. Explain the difference between diminishing returns and decreasing returns to scale. 2. A daily production function for yo-yo's is Q = 12L 1/2 + 8K 1/2 . Show all your work for the following questions. a. What are the marginal product equations for each input? b. How many yo-yo's are produced when labour is 9 and capital is 16? c. What is the slope of the isoquant at the point of production in answer b above? d. If the inputs are quadrupled, are there economies or diseconomies of scale? e. If the production function in (a) is a short-run function with capital fixed at 16, were there diminishing returns to labour when the 9th worker was hired? 3. Suppose that a firm has the following production function: Q (K, L) = 2 L √° (a) If the price of labour is 2 and the price of capital is 4, what is the optimal ratio of capital to labour? (b) For an output level of Q = 1000, how much of each input will be used? 4. The academic world has seen an enormous improvement in communications technology. Internet access, distance learning, virtual classrooms are part of the discussion and many universities are moving toward higher tech learning. Along with all of this has come a decline in the price of electronic information. By using isoquants and isocost lines, tell a story about what you might expect to happen to lecturer’s salaries. List your assumptions because your answer will vary considerably depending on what you assume about the isoquants and isocost lines. (Draw the graph which matches your assumptions to aid your explanation. You only need to write about 100 to 150 words.)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/23/2011 for the course ECON 203 taught by Professor Jules during the Spring '11 term at University of Cape Town.

Page1 / 4

tut 7 - TUTORIAL 7 on chapters 9 and 10 (hand in questions...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online