Econ $2202$ Spring $2024$

Problem Set $1($Chapters $2$ and $3)$

Instructor: Kanda Naknoi

January $26,2024$

Due date: February $2,2024$

Instruction: Please submit your answer to Husky CT in a picture format, or docx or pdf format.

Notations: Y is output; K is capital stock; L is labor input; and letter A is total factor productivity.

$1.(5$ points$)$ The production function is the following: Y $=$ A $($K $+$ L$)$

a$.$ Calculate output and the marginal product of capital $($MPK$)$ when A$=3,$ K$=1$ and

L$=1.$

b$.$ Calculate output and the MPK when A$=3,$ K$=2$ and L$=1.$

c$.$ From your answers in Parts $($a$)$ and $($b$),$ does this production function exhibit

diminishing returns? Explain your reasoning.

d$.$ Does this production function exhibit constant returns to scale? Explain your

reasoning.

e$.$ Will an increase in the level of A from $3$ to $4$ lead to an increase in the MPK$?$

Explain your reasoning.