Managerial Economics and Strategy, 2/e

Chapter 5

1. 1.2 No, it is not possible for $q=10,L=3,$ [&q|=|10, L|=|3,&] and $K=6$ [&K|=|6&] to be a point on this production function. Holding output and other inputs fixed, a production function shows the minimum amount needed of a given factor. As only 5 units of capital are needed to produce 10 units of output given that 3 units of labor are used, using 6 units of capital would imply excess capital. Such an input combination cannot be on the production function.

2. 2.1 One worker produces one unit of output, two workers produce two units of output, and n workers produce n units of output. Thus, the total product of labor equals the number of workers: $q=L.$ [&q|=|L.&] The total product of labor curve is a straight line with a slope of ...