Question

A firm has determined that it can produce 100 units of output with any of the following input combinations:
Capital Labor 20 1 16 2 12 3 11 4 9 6 7 9 5 13
a. What is the marginal rate of technical substitution between 3 and 4 units of labor? what is it between 5 and 7 units of capital?
b. can the marginal product of labor be determined from this data ? Explain
c. Assuming there are constant return to scale, what output rate will be produced if capital is 24 and labor is 6 ?

Answer 1

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Answer on Question #73963 -Economics - Microeconomics

A firm has determined that it can produce 100 units of output with any of the following input combinations:

Capital Labor 20 1 16 2 12 3 11 4 9 6 7 9 5 13

a. What is the marginal rate of technical substitution between 3 and 4 units of labor? what is it between 5 and 7 units of capital?

b. can the marginal product of labor be determined from this data? Explain

c. Assuming there are constant return to scale, what output rate will be produced if capital is 24 and labor is 6?

Answer.

a)

$$MRTS = \frac{11 - 12}{4 - 3} = -1$$ $$MRTS = \frac{5 - 7}{13 - 9} = -0.5$$

b) No, it cannot, because total product is constant (equals to 100)

c) 200 units, because inputs are twice more than (12;3) needed to produce 100 units.

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