ECON 310 – Spring 2007. Chapter 6 – “Inputs and Production Functions.” “Review Questions” (page 217): 1, 3, 5, 6, and 9. “Problems” (pages 217-219): 6.1, 6.2, 6.5, 6.7, 6.9, 6.13, 6.14, and 6.15. Additional Questions: 1) Consider the production function KLLKF 20),( = . For this function KLMPK10= and LKMPL10= . a. Suppose )20,5(),( =LK . How much output can the firm produce? b. Sketch the isoquant associated with 200=Q . c. Identify an input combination that leads to more than 200 units of output being produced. Illustrate this input combination graphically. d. Identify an input combination that leads to less than 200 units of output being produced. Illustrate this input combination graphically. e. Determine KLMRTS,. Is the Marginal Rate of Technical Substitution “Diminishing”? Explain. 2) Determine if the production process underlying each of the following production functions exhibits Increasing, Decreasing, or Constant Returns to Scale: a. KLLKF 52),( += b. KLLKF 52),( += c. LKLKF 25),( = d. LKLKF 25),( = e. }5,2min{),( KLLKF = f. []2}5,2min{),( KLLKF = 3) Consider a “Three Input, Cobb Douglas Production Function” of the form LKJJKLF 10),,( = . Argue that this production process exhibits Increasing Returns to Scale.4) Consider a firm with the isoquant map illustrated below: Answer the following questions based upon this figure. a. Could the underlying production function be KLKLF 25),( += ? Explain. b. Does there appear to be a positive “Marginal Product of Capital” and a positive “Marginal Product of Labor”? Explain. c. Does the production process appear to exhibit a “Diminishing Marginal Rate of Technical Substitution”? Explain. d. Should )150,100(),( =KL produce more than, less than, or exactly 000,10=q units of output? Explain. Should )150,100(),(=KL produce more than, less than, or exactly 000,15=q units of output? Explain. e. Does the production process appear to exhibit “Constant Returns to Scale”? Explain. K L 0 0 200 50 100 400 100 15 10,000 15,000
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