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How much additional output can you produce

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Reference no: EM132263951

Question: Production

A firm has the production function f(K, L) = K0.25L0.5

(a) How much additional output can you produce when you hire an additional marginal unit of capital if K = 16 and L = 25? How much additional output can you produce when you hire an additional marginal unit of labor? How much does each worker produce on average? Is the average product of labor increasing or decreasing? Do not assume this (K = 16 and L = 25) further]

(b) If both inputs are doubled, by how much does output increase? What does this say about returns to scale?

(c) If you want to keep output constant, then how many units of labor can you let go after hiring a marginal unit of capital if the capital-labor ratio is K = 1/4? (Do not assume this further.)

(d) How many units of capital are needed for a given output as a function of labor?

Reference no: EM132263951

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