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211-1 PS3 F07 - MMSS 211-1 Problem Set 3 Fall 2007 1...

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MMSS 211-1 Problem Set 3 Fall 2007 1. Sally’s Sunflowers, Inc. uses fertilizer, labor, and land to produce sunflowers. When the amount of land and labor is fixed, the relationship between the quantity of fertilizer and the number of sunflowers grown per month is as follows: Tons of Fertilizer 0 1 2 3 4 5 6 7 Number of Sunflowers 0 1,000 2,000 3,400 4,400 5,000 5,400 5,000 A. What is the average product of fertilizer when 4 tons are used? B. What is the marginal product of the 3 rd ton of fertilizer? C. Does the total product function exhibit diminishing marginal returns? If so, over what quantities of fertilizer do they occur? 2. A. For each of the following production functions, graph the short-run total product curves assuming that K is fixed at K 0 = 2. i. Q = f(K,L) = 3K + 4L ii. Q = f(K,L) = KL 2 B. Do the production functions obey the law of diminishing returns? 3. Are the following correct? A. If marginal product is decreasing, then average product must also be decreasing.
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