Question

a) Calculate the TP, MP Labor , MPCapital APLabor, AAPcapita and the MRTS .

b) Within what ranges do we see increasing returns, decreasing returns and negative returns?

C. Within what range does the DMRTS happens

Labor Capital

10 200

15 500

20 800

30 1200

40 1500

50 1800

60 2000

70 2300

80 2500

90 2800

Answer 1

Let's solve it in excel:

Q let's from 100 to 1000

a)

b)

MPL decreasing returns

MRTS increasing returns and negative returns

MPC increasing returns, decreasing returns

c) [-20; -60]