Question2 Imagine that you own a company that is a price taker with the production function: q=f(L, K) = L0.25 K0.75 a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this production function have constant, increasing, or decreasing returns to scale? e. What is the short run supply function for the firm? f. What is the derived labor demand for the firm? g. What is the price elasticity of supply? What does this mean economically? h. How does supply shift when the price of labor changes? What does this mean economically? i. What is the price elasticity of labor demand? What does this mean economically? j. How does derived labor demand change when the price of labor changes? What does this mean economically?

Question2 Imagine that you own a company that is a price taker with the production function: q=f(L, K) = L0.25 K0.75 a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this production function have constant, increasing, or decreasing returns to scale? e. What is the short run supply function for the firm? f. What is the derived labor demand for the firm? g. What is the price elasticity of supply? What does this mean economically? h. How does supply shift when the price of labor changes? What does this mean economically? i. What is the price elasticity of labor demand? What does this mean economically? j. How does derived labor demand change when the price of labor changes? What does this mean economically?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.9P

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Question2 Imagine that you own a company that is a price taker with the production function: q= = f(L, K) = L0.25 K0.75 a. What is the MPL ? What does this mean economically? b. What is the MPK? What does this mean economically? c. What is the MRTS? What does this mean economically? d. Does this production function have constant, increasing, or decreasing returns to scale? e. What is the short run supply function for the firm? f. What is the derived labor demand for the firm? g. What is the price elasticity of supply? What does this mean economically? h. How does supply shift when the price of labor changes? What does this mean economically? i. What is the price elasticity of labor demand? What does this mean economically? j. How does derived labor demand change when the price of labor changes? What does this mean economically?
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