and why? 8. The marginal physical productivity of labor is defined as a. a firm\

Question

and why?

8. The marginal physical productivity of labor is defined as a. a firm's total output divided by total labor input. b the extra output produced by employing one more unit of labor while allowing other inputs to vary c. the extra output produced by employing one more unit of labor while holding other inputs constant. d. the extra output produced by employing one more unit of capital while holding labor input constant. 9. Suppose the production function for good q is given by q = 3k + 21 where k and I are capital and labor inputs. Consider three statements about this function: I.The function exhibits constant returns to scale. II.The function exhibits diminishing marginal productivities to all inputs III. The function has a constant Which of these statements is true? a. All of them. b. None of them. c. I and II but not III. d. I and III but not II. of technical substitution.

Explanation / Answer

8) Option c is correct (by definition, other inputs are fixed when MPPL is calculated)

9)

q = 3k + 2l

When inputs are doubled:

q' = 3 x (2k) + 2 x (2l) = 2q

Output is doubled, therefore, the function exhibits constant returns to scale. (first statement is correct)

MPL = dq/dl = 2, MPK = dq/dk = 3 (marginal products are constant, second statement is wrong)

MRTS = MPL/MPK = 2/3 (MRTS is constant, third statement is correct)

Option d is correct

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