Production Point Capital (K) Labor (L) Output (Q) A 1 1 2 B 2 2 C 1 3 D 2 4 E 1 5 F 2 6 G 1 7 H 2 8 X The profuction function is given as: Q=αK + βL B andf E lie on the same isoquant, while D and G are on a higher isoquant. 2. a. Holding capital fixed at one unit, plot the average product of labor (or productivity of labor), and verify that the standard relationship between the marginal and average product of labor holds.
Production Point Capital (K) Labor (L) Output (Q) A 1 1 2 B 2 2 C 1 3 D 2 4 E 1 5 F 2 6 G 1 7 H 2 8 X The profuction function is given as: Q=αK + βL B andf E lie on the same isoquant, while D and G are on a higher isoquant. 2. a. Holding capital fixed at one unit, plot the average product of labor (or productivity of labor), and verify that the standard relationship between the marginal and average product of labor holds.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section7.A: Appendix: A Closer Look At Production And Cost
Problem 1AQ
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Question
| Production Point | Capital (K) | Labor (L) | Output (Q) |
| A | 1 | 1 | 2 |
| B | 2 | 2 | |
| C | 1 | 3 | |
| D | 2 | 4 | |
| E | 1 | 5 | |
| F | 2 | 6 | |
| G | 1 | 7 | |
| H | 2 | 8 | X |
The profuction function is given as: Q=αK + βL
B andf E lie on the same isoquant, while D and G are on a higher isoquant.
2.
a. Holding capital fixed at one unit, plot the average product of labor (or productivity of labor), and verify that the standard relationship between the marginal and average product of labor holds.
b. Which input exhibits diminishing marginal returns? Explain how you arrived at this answer.
c. What is the intuition behind diminishing marginal returns? Why do we typically observe diminishing marginal returns in real life?
d. In this problem, are capital and labor perfect substitutes? Explain.
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