A firm’s production function is ? = ?Lα
?β where A, α, and β are positive constants. The firm
currently uses 500 units of labor and 40 units of capital. If the
firm adds 1 more unit of labor, what happens to productivity of
capital? Explain.
Given a production function Q = f(L, K), if marginal product of
labor and marginal product of capital are both positive, then this
function displays diminishing MRTS. Explain if this statement is
true or...