Question: Suppose the production function for a product is Q = 8 5 K 3 / 5 L 2 / 5 where K is the capital
Suppose the production function for a product is
Q KL
where K is the capital expenditures and L is the number of workhours.
a
Find the marginal productivity of K MPK
b
Find the marginal productivity of L MPL
c Evaluate the marginal productivity ofKMPK when the firm usesunits of labor L andunits of capital Kround to the next unit
MPK
Explain the economic meaning of your answer above:
d Evaluate the marginal productivity ofLMPL when the firm usesunits of labor L andunits of capital Kround to the next unit
MPL
Explain the economic meaning of your answer above:
e Now suppose that this company's cost constraint is the following:
K L
Given the cost constraints, what values of K and L will maximize production? round to the next unit
K units
L units
What is the highest level of production possible given the cost constraint? round to the next unit
Q units
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