roduction func Wild, a small catering compan hy 2. The table below represents th
ID: 1220385 • Letter: R
Question
roduction func Wild, a small catering compan hy 2. The table below represents the tion for Hawg Wild, a small catering The numbers in specializing in barbecued pork. The n the cells represent the number of customers can bor and capital. rs that be served with various combinations of la- Labor (L) 1 100 132 155 174 190 205 2 152 200 235 264 289 310 3 193255 300 337 368 396 4 230 303 357 400 437 470 5 263 347 408 457 500 538 6 293387 455 510 558 600 Capital a. Is this production function a short-run or long-run production function. How can you tell? b. Suppose that Hawg Wild employs 5 units of capital and 2 workers. How many diners will of wner be served? c. Suppose that Hawg Wild employs 5 units capital and 2 workers, but that the owExplanation / Answer
a.It is a long-run production function because capital and labor are both variable.In the long run no inputs are fixed,everything is variable.
b. Taking a llok at table 5th row and second coloumn gives us 347 diners.
c. The marginal product of Billy’s nephew will be 408 –347 = 61. d.No,it does not violate the law of diminishing marginal product.The law of diminishing marginal product is based on the law of diminishing marginal utility. For diminishing marginal product to hold we must assume that other inputs such as capital are held constant.Since, we are trying to compare two different levels of capital and labor without holding any of the inputs constant,therefore it is inappropriate to compare this.
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