Question 7 The production function is f(x,x)=x¹²₁x¹2₂ a. In the short run the amount of factor 2 (x2) is 100 units. Write down the short run production function and draw a graph of it with output on the vertical axis and the amount of factor 1 on the horizontal axis. b. How does the marginal product of x1 in the graph you drew in a) change with the amount of xi? Discuss what you observed in the graph that helped you to determine your answer. Write out the equation for an iso-profit line and add it to the graph you drew in part (a). Show how you derive the iso-profit line from a profit function that depends on output (y) and the amount of the inputs (x1 and x2). c.

Question 7 The production function is f(x,x)=x¹²₁x¹2₂ a. In the short run the amount of factor 2 (x2) is 100 units. Write down the short run production function and draw a graph of it with output on the vertical axis and the amount of factor 1 on the horizontal axis. b. How does the marginal product of x1 in the graph you drew in a) change with the amount of xi? Discuss what you observed in the graph that helped you to determine your answer. Write out the equation for an iso-profit line and add it to the graph you drew in part (a). Show how you derive the iso-profit line from a profit function that depends on output (y) and the amount of the inputs (x1 and x2). c.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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