Suppose a restaurant produces meals (M) using two production inputs:

kitchen equipment (K) and cooking staff (L). The maximum number of meals the

restaurant can produce with these inputs is the result of a technological process

described by:M=K1/2L1/4

(a) What are the marginal products of equipment and staff? Are these marginal

products diminishing?

(b) Find theMRT SL,K

(c) Plot the following three points{L, K}on a figure and represent them with care

fully labeled isoquants:A={6,9};B={16,1};C={8,4}

.

(d) Does this production function exhibit Constant, Increasing or Decreasing re

turns to Scale?

(e) Suppose the restaurant manager wants to choose L and K to minimize costs in

the Long Run. Draw an approximate fifigure that illustrates the optimal choice.