Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where q is the number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to APL = MPL = 5K. Does labor exhibit diminishing marginal returns in this case? O No, the marginal product of labor is constant (for a given K). O No, the marginal product of labor is increasing (for a given K). O Yes, if capital also exhibits diminishing marginal returns. O Yes, this is true for all values of K.
Henry owns a Boba tea shop and produces delicious drinks under the production function q = 5KL where q is the number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired per hour (labor). The average product of labor and the marginal product of labor are both equal to APL = MPL = 5K. Does labor exhibit diminishing marginal returns in this case? O No, the marginal product of labor is constant (for a given K). O No, the marginal product of labor is increasing (for a given K). O Yes, if capital also exhibits diminishing marginal returns. O Yes, this is true for all values of K.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
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Transcribed Image Text:Henry owns a Boba tea shop and produces delicious drinks under the production function q
= 5KL where q is the
number of servings generated per hour, K is the number of tea pots (capital), and L is the number of employees hired
per hour (labor). The average product of labor and the marginal product of labor are both equal to
APL
= MPL
5K. Does labor exhibit diminishing marginal returns in this case?
O No, the marginal product of labor is constant (for a given K).
O No, the marginal product of labor is increasing (for a given K).
O Yes, if capital also exhibits diminishing marginal returns.
O Yes, this is true for all values of K.
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