Question

2 parts: Part B is different numbers

a.)Each extra worker produces two extra units of output up to 4 workers. After 4 workers, each extra worker produces one extra unit of output. Draw the total product, average product of labor and marginal product of labor curves on two graphs.

b.)Suppose inputs are only substitutable at two units of labor for every one unit of capital. Assume that the production function q = f(L, K) has constant returns to scale and that f(2, 0) = 1 and f(0, = 1. What would be the equation for the production function?  What is the average and marginal product of labor in this case?

Answer 1

a)

b) Inputs are only substitutable at two units of labour for one unit of capital

q = f(L,K)

q = f(2,0) = 1;

q = f(0, 1) = 1;

Constant returns to scale;

Equation for this production function would be:

q = f(L, K) = 0.5L + K

Marginal Product of Labour = 0.5

Average Product of Labout = 0.5 + K/L