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Chapter Questions
Total product of capital Assuming that output is a function of variable capital and fixed labor, this is the total output of a firm for a given level of labor input. Total product of labor Assuming that output is a function of variable labor and fixed capital, this is the total output of a firm for a given level of labor input.
CHAPTER QUESTIONS 5.1 What is the difference between a production function and a total product function? 5.2 What is meant by the short run in production? 5.3 What is meant by the long run in production? 5.4 What is the total product of labor? What is the total product of capital? Are these short-run or long-run concepts? 5.5 Suppose that output is a function of labor and capital. Assume that labor is the variable input and capital is the fixed input. Explain the law of diminishing marginal product. How is the law of diminishing marginal product reflected in the total product of labor curve? 5.6 Assume that a production function exhibits the law of diminishing marginal product. What are the signs of the first and second partial derivatives of output with respect to variable labor input? 5.7 Suppose that the total product of labor curve exhibits increasing, diminishing and negative marginal product. Describe in detail the shapes of the marginal product and average product curves. 5.8 Suppose that the total product of labor curve exhibits only diminishing marginal product. Describe in detail the shapes of the marginal product and average product curves. 5.9 Explain the difference between the law of diminishing marginal product and decreasing returns to scale. 5.10 Suppose that output is a function of labor and capital. Define the output elasticity of variable labor input. Define the output elasticity of variable capital input. What is the sum of the output elasticity of variable labor and variable capital input? 5.11 Suppose that a firm’s production function is Q = 75K0.4L0.7. What is the value of the output elasticity of labor? What is the value of the output elasticity of capital? Does this firm’s production function exhibit constant, increasing, or decreasing returns to scale? 5.12 Define “marginal rate of technical substitution.” 5.13 Suppose that output is a function of labor and capital. Diagrammatically, what is the marginal rate of technical substitution? 5.14 Explain the difference between perfect and imperfect substitutability of factors of production.
