1. The production function for the personal computers of DISK, Inc., is given by q = 10K0.5L0.5,where q is the number of computers produced per day, K is hours of machine time, and L ishours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function q = 10K0.6L0.4. a. If both companies use the same amounts of capital and labor, which will generate more output? b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor greater? Explain.

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Chapter1: Making Economics Decisions
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1. The production function for the personal computers of DISK, Inc., is given by q = 10K0.5L0.5,where q is the number of computers produced per day, K is hours of machine time, and L ishours of labor input. DISK’s competitor, FLOPPY, Inc., is using the production function q = 10K0.6L0.4.

a. If both companies use the same amounts of capital and labor, which will generate
more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In
which company is the marginal product of labor greater? Explain.

C O
O X#| C:/Users/huangyil/Downloads/Tutorial%207%.. Q $
1. What is a production function? How does a long-run produIction finction differ from a short-run
production function?
2. Explain the term "marginal rate of technical substitution." What does a MRTS = 4 mean?
3. The production function for the personal computers of DISK, Inc., is given by q= 10KL0s,
where q is the number of computers produced per day, K is hours of machine time, and L is
hours of labor input. DISK's competitor, FLOPPY, Inc., is using the production function
9 = 10KL04
%3D
If both companies use the same amounts of capital and labor, which will generate
more output?
b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In
which company is the marginal product of labor greater? Explain.
a.
4. 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
Number of
Transcribed Image Text:C O O X#| C:/Users/huangyil/Downloads/Tutorial%207%.. Q $ 1. What is a production function? How does a long-run produIction finction differ from a short-run production function? 2. Explain the term "marginal rate of technical substitution." What does a MRTS = 4 mean? 3. The production function for the personal computers of DISK, Inc., is given by q= 10KL0s, where q is the number of computers produced per day, K is hours of machine time, and L is hours of labor input. DISK's competitor, FLOPPY, Inc., is using the production function 9 = 10KL04 %3D If both companies use the same amounts of capital and labor, which will generate more output? b. Assume that capital is limited to 9 machine hours, but labor is unlimited in supply. In which company is the marginal product of labor greater? Explain. a. 4. 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 Number of
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