Suppose the production function for automobiles is Q = KL where Q is the quantity of automobiles produced per year, L is the quantity of labor
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Question

Suppose the production function for automobiles is Q = KL where Q is the quantity of

automobiles produced per year, L is the quantity of labor (man-hours) and K is the quantity of capital (machine-hours). Suppose we sketch the isoquant corresponding to a quantity of Q = 100. Which of the following are true?

1. The isoquant is convex to the origin.

2. The general equation of an isoquant for this production function is K=100/L.

3. Marginal rate of technical substitution when K = 20 and L = 5 is 4. 

4. Marginal rate of technical substitution MRTS L, K decreases as L increases. 

Top Answer

ans c is right because MRTS lk=MPL/MPK NOW MPL= dQ/dl=k and mpk=dQ/k=l So MRS WHEN K=20 AND L IS 5... View the full answer

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