This assignment will cover important concepts from our Production and Profit Maximization lectures. 1. The graph below plots the production function for John Deere's ability to produce tractors per week as a function of labor hours per week. Highlight on the graph the region where John Deere enjoys increasing returns to scale and decreasing returns to scale, respectively. 400- 300 Output of tractors per week 200 100. 250 500 750 Labor Hours per week 2. Give an intuitive explanation for why the law of diminishing marginal product must exist in the context of firm's desire to maximize profit. 3. What tends to happen in industries where there are significant returns to scale?4. Given the graph of two isoquants below, calculate the marginal product of capital, MPK, at labor = 1.5. Capital Hours per week L=40 i: 20 {15)1.3'3\\ Labor Hours per week b. Estimate the Marginal Rate of Technical Substitution (MRTS) at (1.5, 1.25). Note, you will have to 'eye-ball' it. 5. Why does modeling production as convex in inputs probably make sense in the real world