2. A firm uses both labor and capital to produce the output and has a production...

 

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2. A firm uses both labor and capital to produce the output and has a production function q(K, L) = KL. (a) What is the marginal product of labor, i.e., MPL? Does it exhibit diminishing marginal product of labor? (b) What is the marginal product of capital, i.e., MPK? Does it exhibit diminishing marginal product of capital? (c) What is the marginal rate of technical substitution, i.e., MRTS? Does it exhibit diminishing MRTS? (d) A firm's short-run capital is fixed at 16, i.e., K = 16. In order to produce 8 units of output, how many units of labor does the firm need? (e) A firm's short-run capital is fixed at 16, i.e., K = 16. What is the average product of labor, i.e., APL? (f) Does this firm exhibits an increasing, decreasing, or constant return to scale? Why? 2. A firm uses both labor and capital to produce the output and has a production function q(K, L) = KL. (a) What is the marginal product of labor, i.e., MPL? Does it exhibit diminishing marginal product of labor? (b) What is the marginal product of capital, i.e., MPK? Does it exhibit diminishing marginal product of capital? (c) What is the marginal rate of technical substitution, i.e., MRTS? Does it exhibit diminishing MRTS? (d) A firm's short-run capital is fixed at 16, i.e., K = 16. In order to produce 8 units of output, how many units of labor does the firm need? (e) A firm's short-run capital is fixed at 16, i.e., K = 16. What is the average product of labor, i.e., APL? (f) Does this firm exhibits an increasing, decreasing, or constant return to scale? Why?

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a The marginal product of labor MPL represents the additional output that is produced when an additional unit of labor is added while holding the capi... View the full answer