Microeconomics, 5th Edition - Besanko - SMch06

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1、Besanko&Braeutigam–Microeconomics,5theditionSolutionsManualChapter6InputsandProductionFunctionsSolutionstoReviewQuestions1.Wesaidthattheproductionfunctiontellsusthemaximumoutputthatafirmcanproducewithitsquantitiesofinputs.Whydoweincludethewordmaximuminthisdefinition?Theproductionfunctiontells

2、usthemaximumvolumeofoutputthatmaybeproducedgivenacombinationofinputs.Itispossiblethatthefirmmightproducelessthanthisamountofoutputduetoinefficientmanagementofresources.Whileitispossibletoproducemanylevelsofoutputwiththesamelevelofinputs,someofwhicharelesstechnicallyefficientthanothers,theprod

3、uctionfunctiongivesustheupperboundon(themaximumof)thelevelofoutput.2.Supposeatotalproductfunctionhasthe“traditionalshape”showninFigure6.2.Sketchtheshapeofthecorrespondinglaborrequirementsfunction(withquantityofoutputonthehorizontalaxisandquantityoflaborontheverticalaxis).Thelaborrequirementsf

4、unction,whichistheinverseoftheproductionfunction,tellsustheminimumamountoflaborthatisrequiredtoproduceagivenamountofoutput.3.Whatisthedifferencebetweenaverageproductandmarginalproduct?Canyousketchatotalproductfunctionsuchthattheaverageandmarginalproductfunctionscoincidewitheachother?Copyright

5、©2014JohnWiley&Sons,Inc.Chapter6-25Besanko&Braeutigam–Microeconomics,5theditionSolutionsManualTheaverageproductoflaboristheaverageamountofoutputperunitoflabor.Themarginalproductoflaboristherateatwhichtotaloutputchangesasthefirmchangesitsquantityoflabor.Thetotalproductfunctioninthegraphbelow,w

6、hichislinear,wouldhavetheaverageandmarginalproductscoincide.Inparticular,forallvaluesofwewouldhave.4.Whatisthedifferencebetweendiminishingtotalreturnstoaninputanddiminishingmarginalreturnstoaninput?Canatotalproductfunctionexhibitdiminishingmarginalreturnsbutnotdiminishingtotalreturns?Withdimi

7、nishingtotalreturnstoaninput,increasingtheleveloftheinputwilldecreasetheleveloftotaloutputholdingtheotherinputsfixed.Diminishingmarginalreturnstoaninputmeansthatastheuseofthatinputincreasesholdingthequantitiesoftheotherinputsfixed,themarginal