The table below presents estimates of the maximum levels of output possible with various combination
Question: 22. The table below presents estimates of the maximum levels of output possible with various combinations of two inputs.
| Capital (K) | |||||
| 5 | 11 | 25 | 37 | 47 | 51 |
| 4 | 10 | 23 | 33 | 41 | 44 |
| 3 | 8 | 18 | 25 | 30 | 34 |
| 2 | 5 | 11 | 16 | 20 | 22 |
| 1 | 1 | 4 | 8 | 10 | 11 |
| 1 | 2 | 3 | 4 | 5 | |
| Labor (L) | |||||
Assume that a unit of output sells for $5 and that the firm currently employs one unit of capital (K = 1).
| (i) | What is the marginal product of labor when L = 2? |
| (ii) | What is the average product of labor when L = 2? |
| (iii) | What is the marginal revenue product of labor when L = 2? What is the output elasticity of labor when L = 2? |
| (iv) | If the wage rate of labor is $10, how many units of labor should the firm hire and how many units of output should it produce? |
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See Solution: The solution consists of 2 pages
Deliverables: Word Document
Deliverables: Word Document
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