Suppose life expectancy in years (L) is a function of two inputs, health expenditures (H) and nutrition expenditures (N) in hundreds of dollars per year. The production function is L = CH0.60 NO.40 Beginning with a health input of $500 per year (H = 5) and a nutrition input of $300 per year (N=3), show that the marginal product of health expenditures and the marginal product of nutrition expenditures are both decreasing. The change in the marginal product of health expenditures (MPH) is AMPH ΔΗΓ and the change in the marginal product of nutrition expenditures (MPN) is AMPN AN Life expectancy (L) Health expenditures (H) Q Q G

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