The annual productivity of a certain country is

units, where K is capital expenditure in millions of dollars and L measures the labor force in thousands of worker-hours.

a. Find the marginal productivity of capital and the marginal productivity of labor.

b. Currently, capital expenditure is 5.041 billion dollars (K = 5,041) and 4,900,000 worker-hours (L = 4,900) are being employed. Find the marginal productivities at these levels.

c. Should the government of the country encourage capital investment or additional labor employment to increase productivity as rapidly as possible?

Transcribed Image Text:

Q(K, L) = 150[0.4K-¹/2 + 0.6L-¹/21-²