problem set 5 - Middle East Technical University Department...

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

View Full Document Right Arrow Icon
Middle East Technical University Spring 2011 Department of Economics ECON 201 Erol Çakmak TA: Osman Değer PROBLEM SET 5 1. Suppose a firm s production function is given as Q(K,L)= 150K 2 L 2 K 3 L 3 Assume capital is fixed at K= 5 units. a. Derive the firm s total product of labor, marginal product of labor and average product of labor. b. Plot MPL and APL on the same graph. c. Find the amount of labor at which MPL is maximized. d. Find the amount of labor necessary for this production process for MPL=APL. e. What is the maximum number of output the firm can produce in the short run? 2. Calculate the degree of homogeneity associated with the following production functions and comment on their returns to scale. a. Q(K,L) = AK α L β b. Q(K,L) = α K + β L c. Q(K,L) = K 3 /(KL + L 2 ) d. Q(K,L) = (L 2 + 8KL) 1/2 e. Q(K,L,M) = (MK + KL M 2 )/ L 3/2 3. Briefly answer the following questions: a. Must perfect substitutes have isoquants that are parallel straight lines with a slope of
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.

Page1 / 2

problem set 5 - Middle East Technical University Department...

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