{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ANSWERS EXTRA PROBLEM FOR HOMEWORK SET 3

# To see this a bit more closely suppose we had the

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: f (and likewise, as we add more z, it changes the productivity of y. The term, , then, captures the net change in productivity due to adding, marginally, additional units of y and z. To see this a bit more closely, suppose we had the separable production function we discussed in class, ,, , , where and are concave. In this setting, changes in y and changes in z have no effect on the productivity of the other input, so ≡ 0, and, in this case, 0 as we’d expect. From here, we can find the elasticity. I haven’t done this below (the elasticity was one reason we might want the derivative, ). To find the cross derivatives , , we do similarly as we did above: Set 0; we have 0 1 0 The determinant, Δ hasn’t changed, We have: 0 1 0 Δ Δ Again, the same sort of argument as we made above applies. Let’s look at the separable case, ,, ≡ , . In this case, 0. Since the function is concave, we know that mean? 0, so 0 provided 0. What does this is the marginal product of x. If the price of the factor y goes up, w...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern