Question: Production function for a firm is Q =AL K Where Q is output and L and K are the labor and capital inputs respectively and

Production function for a firm is Q =AL K Where Q is output and L and K are the labor and capital inputs respectively and let the price of K=r and the price of L=w a. Show that the production function is homogenous of degree +. b. Determine the relationship between marginal and average products of labor. c. Show that marginal product of labor diminishes as L increases holding K at fixed level. d. Find out the marginal rate of technical substitution of labor for capital (MRTSlk)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

A car with load q is parked at the left side of a steel bridge, while a truck with load ris parked at the right side. Without special programs (Excel and calculator are fine), find the maximum...

Given below is the production function for a firm Q = 50 L0.7 K0.4 Here Q is output and L and K are the labor and capital inputs respectively and that the price K = r= Rs 40 and the price of L=w= Rs...

Gob runs a magic trick factory that uses a fixed proportion production function: q = min{aL, bK} where q is the output of magic tricks given labor and capital inputs L and K, respectively, and...

The ACME Sock Company's (ASC) production function is given by Q = 30K0.4-0.7, where K and L are ASC's annual capital and labor inputs, respectively, and Q is their annual output, measured in 1000s of...

1. (21 points) Suppose a small firm employs Capital (K) and labour (L) at its !" production of output. The production function of the firm is: = 5 + 10 K + 100#.%. Assume that K=25 in the short run....

L/UC FAPALLL QUL WY CEUURALLL 1D L Part I Theory 1. |32 points] You observe an #d sample of data (Y}, L, K;) across a set of manufacturing firms . Here ; denotes the output (e.g. total sales) of the...

Totally Tubular Socks (TTS) produces tube socks for the discerning sock aficionado. Their production function is Q = 30K 0.4 L0.7 , where K and L are their annual capital and labor inputs,...

(40 marks) Consider a production function for a firm: Q = 2K 1/2 L 1/2 where Q is output, K is capital, and L is labor. MP K = K -1/2 L 1/2 and MP L = K 1/2 L -1/2 . Suppose initially K is equal to...

I believe I'm mostly having a problem with simplying what is asked and how to manipulate the equations to arrive to the answer. I understand the substitute and solve Chapter 5 1) A firm's analysts...

Assume that the production function for a firm is q = 10K .5 L .5 . The price of L and K are both $20 each. In the short run, the firm has 1 unit of capital. 1.What is the firm's short-run cost...

Use a cell reference or a single formula where appropriate in order to receive full credit. Do not copy and paste values or type values, as you will not receive full credit for your answers. The...

Assume that your business is working on a complicated project that is supposed to be completed in 12 months. Every month you are supposed to complete a work, worth $20000. After the fourth month the...

Consider an income distribution in which 1/3 of the population earns X dollars, 1/3 of the population earns Y> X dollars, and 1/3 of the population earns Z> Y> X dollars. (a) Derive a formula for GDP...

Find the derivative. y = 3 x - 9 6 x + 3

Each year America.EdU ranks the best paying college degrees in America. The following data show the median starting salary, the mid-career salary, and the percentage increase from starting salary to...

Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and...

The weekly time tickets indicate the following distribution of labor hours for three direct labor employees: The direct labor rate earned per hour by the three employees is as follows: Tom Couro...

Construct a stem-and-leaf display for the following data. Use a leaf unit of 10. 1161 1206 1478 1300 1604 1725 1361 1221 1378 1623 1426 1557 1730 1706

Construct a stem-and-leaf display for the following data. 11.3 9.3 9.6 8.1 10.4 7.7 8.3 8.4 10.5 6.3 7.5 9 7 5 5

Write a program to wish happy birthday to a student. Firstly, take today month and day as an input and secondly take birthday as an input in the form of month and day. If the input day and month...

Is it necessary to change something in your everyday life in order for you to achieve the goal?

What comments do you get from the outside world in the imagined future when you have achieved what you wanted?

14. Think of a positive experience in your life, once you experienced that you had great creativity, great insight or a very strong concentration around some-thing you focused strongly on achieving....