Question: 11.2 Suppose the production function for widgets is given by q = KL- .8K 2 - .IV, where q represents the annual quantity of widgets

11.2 Suppose the production function for widgets is given by q = KL- .8K 2

- .IV, where q represents the annual quantity of widgets produced, K represents annual capital input, and L represents annual labor input.

a. Suppose K— 10; graph the total and average productivity of labor curves. At what level of labor input does this average productivity reach a maximum? How many widgets are produced at that point?

b. Again assuming that K= 10, graph the MPL curve. At what level of labor input does MPL = 0?

c. Suppose capital inputs were increased to K — 20. How would your answers to parts (a)

and

(b) change?

d. Does the widget production function exhibit constant, increasing, or decreasing returns to scale?

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