The sparty, firm is planning to begin production of new goods. The production fu

Question

The sparty, firm is planning to begin production of new goods. The production function is: g = f(L, K) = 10 L1/2 / K1/2 The marginal product of labor is: MPL = 5 K1/2 / L1/2 The marginal product of capital is: MPK = 5 L1/2 / K1/2 (Put labor on the X axis and capital on the Y axis) Explain in one sentence why you know that this firm's production function has decreasing marginal product of labor (MPL), decreasing marginal product of capital (MPK). How docs the marginal rate of technical substitution MRTS change as you move from high capital low labor to low capital high labor? Draw the isoquants for q = 500 and for q = 160 Show that this firm has constant returns to scale. Sparty decides to purchase 25 units of capital. What is the short run production function?

Explanation / Answer

the marginal product or marginal physical product of an input (factor of production) is the extra output that can be produced by using one more unit of the input (for instance, the difference in output when a firm's labor usage is increased from five to six units), assuming that the quantities of no other inputs to production change.

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