Question

I have solved Q1 and I need to solve Q2.

1. Tom is a farmer. Tom grows wheat. The quantity that he produces is determined by the following production function:

Y=10I^1/2

Where “I” stands for investment and is the quantity of wheat that he plants a

Year	Investment	output
1	1	10
2	10/2=5	10 (5)1/2= 22.3~22*
3	22/2= 11	10(11)1/2=33.1~33*
4	33/2 = 16.5 ~16*	10(16)1/2= 40
5	40/2 = 20	10(20)1/2 = 44.7~45*
6	45/2= 22.5 ~23*	10(23)1/2=47.9~ 48*
7	48/2=24	10(24)1/2= 48.9~49*

* --> approximate values are taken

2. Now imagine that everything is the same except Tom plants 100 units in the first year. Fill in the following Table.

Year                         Input                        Output

1                               100

2

3

4

5

6

7

b. Plot these points on your graph above and notice what is happening to output over time in both cases.

Answer 1