Consider the following production function: Q = AL° Kb. Assume A > 0. Further assume 0 < a < 1, and 0 < b < 1. 1. What is the Marginal Product of Labor (MPL)? Is it diminishing as L increases? What is the Marginal Product of Capital (MPK)? Is it diminishing as K increases? 2. What is the Average Product of Labor (APL)? What is the Average Product of Capital (APK)? 3. What is the TRSL,K? Is the absolute value of TRSL.K diminishing in K? Is it diminishing in L?
Consider the following production function: Q = AL° Kb. Assume A > 0. Further assume 0 < a < 1, and 0 < b < 1. 1. What is the Marginal Product of Labor (MPL)? Is it diminishing as L increases? What is the Marginal Product of Capital (MPK)? Is it diminishing as K increases? 2. What is the Average Product of Labor (APL)? What is the Average Product of Capital (APK)? 3. What is the TRSL,K? Is the absolute value of TRSL.K diminishing in K? Is it diminishing in L?
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 6P
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Transcribed Image Text:Question 3:
Consider the following production function:
Q = ALa K¹. Assume A > 0. Further assume
0 < a < 1, and 0 < b < 1.
1. What is the Marginal Product of Labor (MPL)? Is
it diminishing as L increases? What is the
Marginal Product of Capital (MPK)? Is it
diminishing as K increases?
2.
What is the Average Product of Labor (APL)?
What is the Average Product of Capital (APK)?
3. What is the TRSL,K? Is the absolute value of
TRSL,K diminishing in K? Is it diminishing in L?
4. Are there constant, decreasing, or increasing
returns to scale? How does this depend on the
parameters?
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