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ECON 040 Lecture Notes - Lecture 14: Production Function, Marginal Product, Substitute Good

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taupesardine275
4 Oct 2020
School
College of The Sequoias
Department
Economics (ECON)
Course
ECON 040
Professor
kasun

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Document Summary

In short run, the firm"s production function is. Where q is output, l is the amount of labor, and k is the fixed number of units of capital. The amount of output (or total product) that can be produced by a given amount of labor. The change in total product of labor, resulting from using an extra unit of labor, holding other factors (capital) constant: Relationships between total product of labor, marginal product of labor, and average product of labor. Table 6. 1 total product, marginal product, and average product of labor with. Observation: the relationship between total product and marginal product. From l = 0 to l = 4, marginal product is increasing: total product is increasing faster and faster. From l = 4 to l = 11, marginal product is decreasing (and positive): total product is increasing slower and slower. When l = 11, mp = 0: total product is max.

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Related Questions

Suppose a firms production function is given by Q= L^1/2 * K^1/2.The marginal product of labor and the marginal product of capitalare given by:
MPL= K^1/2 /2L^1/2 and MPk= L^1/2/2K^ 1/2.
Suppose the price of labor is w=24 and the price of capital is r=6.Derive the firms total cost function.

Suppose a firm's production function is given by Q= L^1/2 * K^1/2.The marginal product of labor and the marginal product of capital is given by:
MPL= K^1/2 /2L^1/2 and MPk= L^1/2/2K^ 1/2.
What is the firm's marginal cost?

Consider the following production function using capital (K) and labor (L) as inputs. Y = 10.K0.5L0.5. The marginal product of labor is (MPL=) 5.K0.5/L0.5, and the marginal product of capital (MPK) = 5.L0.5/K0.5.

a. If K = 100 and L=100 what is the level of output Y?

b. If labor increases to 110 while K=100, what is the level of output?

c. If labor increases to 110 while K=100, what is the marginal product of labor?

d. If labor increases to 120 while K=100, what is the marginal product of labor?

e. What happens to the marginal product of labor when labor increases while capital remains unchanged?

f. Estimate Marginal Products of Capital in the above cases of (c) and (d) using the equation given in the question.

g. When labor increases from 100 to 110 and then to 120 while the level of capital does not change, what happens to the Marginal Product of Capital?