MIME-Version: 1.0 Content-Location: file:///C:/EC8ADD8D/newpset4im.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" NAME __________________________________________ Dr Robert Hor= n

 

 

NAME __________________________________________                &= nbsp;              &= nbsp;           &nbs= p;           &= nbsp;           &nbs= p;   Dr Robert Horn

Economics 331: Intermediate Microeconomics            =              

 

Production Theory Problem Set

 

 

1.=   <= /span>Suppose a chair manufa= cturer is producing in the short run. The manufacturer knows that as the number of laborers used in the production process increases from 1 to 7, the number of chairs produced changes as follows: 10, 17, 22, 25, 26, 25, 23.

 

A. Calculate the marginal and average products of labor.

 

B. Does the function exhibit diminishing returns= to labor? Explain.

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C. Explain intuitively what might cause the ma= rginal product of labor to become negative.

 

2= .      =             Gathering mushrooms in a forest requires only labor input. The number of mushrooms gathered per hour is given by:

Q =3D 100 L ½ , where L is labor per = hour:

a.      = Graph this production function

b.      What is the average pr= oduct of labor?

c.      = the marginal product of labor is:

MPl<= /span> = =3D  50 / L 1/2

  &nbs= p;            &= nbsp;        graph the average and marginal product curves on the s= ame graph.

 

 

3.      =             There are two final steps in the manufacture of dyed T-shirts. First the T-shirts are run through the dye process which colors them. Then the dy= ed shirts are dried and packaged for distribution. Each T-shirt requires one u= nit of dye mixture. Further the dye mixture can cut designs for 3,000 T-shirts = per week and the drier/packager can assemble 2,000 per week. The machines are o= nly available in integer units.

a.      = ho= w many of each machine,= and how much material, is the minimum needed to produce 9,000 T-shirts per week? How about 12,000 per week?

b.      ov= er this range of output,= does the production process exhibit increasing, constant, or decreasing returns = to scale?

 

4.         = For the production function:  Q = =3D 6 L2  -= L3 , for L =3D O through L =3D 6 construct a table showing the relationship between labor input and total product,             average product and marginal product.  Determine the output level at which each of these are maximized.