If a firm has a production function of the form: Q = LK1/2, what can we conclude? O The firm has constant marginal returns to labour and increasing marginal returns to capital. The firm has decreasing marginal returns to labour and increasing marginal returns to capital. The firm has constant marginal returns to labour and constant marginal returns to capital. The firm has constant marginal returns to labour and decreasing marginal returns to capital. The firm has increasing marginal returns to labour and increasing marginal returns to capital.

If a firm has a production function of the form: Q = LK1/2, what can we conclude? O The firm has constant marginal returns to labour and increasing marginal returns to capital. The firm has decreasing marginal returns to labour and increasing marginal returns to capital. The firm has constant marginal returns to labour and constant marginal returns to capital. The firm has constant marginal returns to labour and decreasing marginal returns to capital. The firm has increasing marginal returns to labour and increasing marginal returns to capital.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 7E

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Assuming a Cobb-Douglas production function with constant returns to scale, then, as L rises with K and A constant, it will be the case that: (a) Both the marginal product of labour and the marginal product of capital will fall(b) The marginal product of labour will fall and the marginal product of capitall will rise(c) Both the marginal product of labour and the marginal product of capital will rise(d) The marginal product of labour will rise and the marginal product of capital will fall
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Suppose the production function for widgets is given by q=KL+6L²-0.1L³ where q represents the annual quantity of widgets produced, K represents annual capital input and L represents annual labor input. A) Suppose K=10. At what level of labor input does average product of labor reach a maxiumum? How many widgets are produced at that point? B) Again assuming that K=10, at what level of labor input does MPL=0? C)Determine and show whether the production process exhibits law of diminishing returns.
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