In the short term, a firm cannot vary its capital and operates with K = 9. It can, however, vary the amount of labor (L) that it uses. For each production function below, explain why the firm will or will not experience diminishing marginal returns to labor in the short run. q = 35L + 40K q = L0.5 K0.5 q = min{3L,2}
In the short term, a firm cannot vary its capital and operates with K = 9. It can, however, vary the amount of labor (L) that it uses. For each production function below, explain why the firm will or will not experience diminishing marginal returns to labor in the short run. q = 35L + 40K q = L0.5 K0.5 q = min{3L,2}
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the short term, a firm cannot vary its capital and operates with K = 9. It can, however, vary the amount of labor (L) that it uses. For each production function below, explain why the firm will or will not experience diminishing marginal returns to labor in the short run.
- q = 35L + 40K
- q = L0.5 K0.5
- q = min{3L,2}
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