Question: Q1. Suppose the production function for widgets is given by: q=kl0.8k20.2l2 where q represents the annual quantity of widgets produced, k represents annual capital input,

 Q1. Suppose the production function for widgets is given by: q=kl0.8k20.2l2

Q1. Suppose the production function for widgets is given by: q=kl0.8k20.2l2 where q represents the annual quantity of widgets produced, k represents annual capital input, and I represents annual labor input. a. Suppose k=10, at what level of labor input does this average productivity of labor reach a maximum? How many widgets are produced at that point? b. Again assuming that k=10. 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

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 Accounting Questions!