Question

Suppose a firm has a production function given by Y = zK0.3 N0.7.
(a) If z = 1 and K = 1, graph the production function. Is the marginal product of labor positive and diminishing?
(b) Now, graph the production function when z = 1 and K = 1. Explain how the production function changed from part (a).
(c) Next, graph the production function when z = 1 and K = 2. What happens now?
(d) Given this production function, the marginal product of labor is given by MPN = 0.7K0.3 N–0 .3. Graph the marginal product of labor for (z, K) = (1, 1), (2, 1), (1, 2), and explain what you get.



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  • CreatedDecember 05, 2014
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