Imagine you own a business firm with a friend of yours. During the first quarter you come up with the following information that: • Output elasticity of Capital is 0.2 • Output elasticity of Labour is 0.8 • Rate of Technological advancement is 12 a) What kind of business firm is the one that you own? Mention 2 of its characteristics. b) Derive the marginal productivity of capital and labour, by means of Cobb- Douglas production function. c) If Y = F (K, L) where K = 1000 and L = 400, determine the values of MPx and MPL.
Imagine you own a business firm with a friend of yours. During the first quarter you come up with the following information that: • Output elasticity of Capital is 0.2 • Output elasticity of Labour is 0.8 • Rate of Technological advancement is 12 a) What kind of business firm is the one that you own? Mention 2 of its characteristics. b) Derive the marginal productivity of capital and labour, by means of Cobb- Douglas production function. c) If Y = F (K, L) where K = 1000 and L = 400, determine the values of MPx and MPL.
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:Imagine you own a business firm with a friend of yours. During the first quarter
you come up with the following information that:
• Output elasticity of Capital is 0.2
• Output elasticity of Labour is 0.8
• Rate of Technological advancement is 12
a) What kind of business firm is the one that you own? Mention 2 of its
characteristics.
b) Derive the marginal productivity of capital and labour, by means of Cobb-
Douglas production function.
c) If Y = F (K, L) where K= 1000 and L= 400, determine the values of MPx and
%3D
MPL.
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