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Question: firms acquire and combine inputs to produce a final product...

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Firms acquire and combine inputs to produce a final product (output) that can be sold in markets. The formal representation of this is called a production function and is written: Q = f(inputs) For this question, assume we have two inputs, K for capital (think brick and mortar) and L for labor (think inputs easily and quickly changed), and that capital K is fixed in the short run. Q = f(L;K0) where K if fixed at the level of K0 To repeat, for this assignment, we will deal strictly with the short run, the period of time where K is fixed but L is easily varied. Question 1 Since we are in the short run, the only way we can increase output is by increasing inputs, and that means L since K is fixed. Using the axes as constructed below, depict a typical production function exhibiting increasing marginal product for low inputs and diminishing marginal product for higher input levels. Question 2A Now reproduce the graph from Question 1, but indicate the range of the curve exhibiting this concept of diminishing marginal product. Upload your graph. Question 2B In your own words, explain the concept of the Law of Diminishing Marginal Product. Question 3 On the axes below, draw a candidate short run production function (fixed K) that only exhibited diminishing marginal product, even at low input (L) levels. Graph

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