Answered: a)Calculate the marginal products of…

a)Calculate the marginal products of labour and capital. b)What is the value of marginal rate of technical substitution when 4 units of capital and 3 units of labour are used?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

a firm that has the following production function: √（KL^2）Where, K and L are the units of capital and labour used in the production process respectively. a)Calculate the marginal products of labour and capital. b)What is the value of marginal rate of technical substitution when 4 units of capital and 3 units of labour are used?

Definition Definition Rate at which one factor of production is decreased in order to maintain the same level of output when another factor of production is increased. MRTS allows for the substitution between factors of production: labor (L) and capital (K) in order to maintain a given level of output.

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