ECON 3411 : Chapter 5 Solution.pdf
Document Summary
Chapter 5: answers to questions and problems: when k = 81 and l = 16, q = (81)0. 75(16)0. 25 = 54. When k = 81 and l = 256, q = (81)0. 75(256)0. 25 = (27)(4) = 108. = 108/81 = 0. 422: the marginal product of labor is mpl = (1/4)*(81)0. 75(l)-3/4 = (27/4)(l)-3/4. L = 16, mpl = (27/4)(16)-3/4 = 0. 844. When l = 81, mpl = (27/4)(81)-3/4 = 0. 25. Setting this equal to the wage of gives 1350(l)-3/4 = 50. Solving for l, the optimal quantity of labor is. L = 81: see table 5-1. (1) (2) (3) (4) (5) 600: labor is the fixed input while capital is the variable input, fixed costs are 20() = , to produce 475 units in the least-cost manner requires 6 units of capital, which cost each. The law of diminishing marginal returns is the decline in marginal productivity experienced when input usage increases, holding all other inputs constant.
