PS 3 - Ch. 6_dis - Economics 3070-004 Spring 2011 (Due Mar...

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Economics 3070-004 Spring 2011 1 Problem Set 3 (Due Mar 19th in class) 1. Suppose that the production function for Prada shoes is given by 3 2 L KL Q = , where Q is the number of Prada shoes produced per year, K is the machine-hours of capital, and L is the man-hours of labor. Fix 600 = K (so the labor is the single variable here). a. Derive the equation for average product of labor and graph the average product of labor curve. At what level of labor does the average product curve reach its maximum? b. At what level of labor does the marginal product curve appear to reach its maximum? At what level does the marginal product equal zero? At what level does marginal product curve intersect average product curve? c. Over what range of L does the production function exhibit increasing total returns? Diminishing total returns? Increasing marginal returns? Diminishing marginal returns? 2. Consider again the production function for Prada shoes: 3 2 L KL Q = . Leave
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This note was uploaded on 03/19/2012 for the course ECON 3070 taught by Professor Shan during the Spring '12 term at University of Colorado Denver.

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PS 3 - Ch. 6_dis - Economics 3070-004 Spring 2011 (Due Mar...

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