Transcription of Solution to Chapter 6
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Solution to Chapter 6
Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy 2900111 (Section 1) Chairat Aemkulwat Economics I: Microeconomics Spring 2015. Solution to Selected Questions: Chapter 6. PRODUCTION. 2. Suppose a chair manufacturer is producing in the short run (with its existing plant and equipment). The manufacturer has observed the following levels of production corresponding to different numbers of workers: Number of chairs Number of workers 1 10. 2 18. 3 24. 4 28. 5 30. 6 28. 7 25. a. Calculate the marginal and average product of labor for this production function. q The average product of labor , APL, is equal to . The marginal product of L. q labor , MPL, is equal to , the change in output divided by the change in labor L. input. For this production process we have: L q APL MPL.
The marginal rate of technical substitution measures the number of units of capital that can be exchanged for a unit of labor while still maintaining output. If the firm can always trade two units of labor for one unit of capital then the MRTS of labor for capital is constant and equal to 1/2, and the isoquant is linear. c.
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