3. Suppose the automobiles produced per year, L is the quantity of labor (man-hours) and K is the quantity of capital (machine-hours). a) Sketch the isoquant corresponding to a quantity of Q=300? b) Calculate the marginal rate of technical substitution of labor for capital and indicate if it is increasing, decreasing or constant.
3. Suppose the automobiles produced per year, L is the quantity of labor (man-hours) and K is the quantity of capital (machine-hours). a) Sketch the isoquant corresponding to a quantity of Q=300? b) Calculate the marginal rate of technical substitution of labor for capital and indicate if it is increasing, decreasing or constant.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.2P
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Transcribed Image Text:3. Suppose the production function for automobiles is Q-LK where Qis the quantity of
automobiles produced per year, L is the quantity of labor (man-hours) and K is the quantity
of capital (machine-hours).
a) Sketch the isoquant corresponding to a quantity of Q=300?
b) Calculate the marginal rate of technical substitution of labor for capital and indicate if it
is increasing, decreasing or constant.
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