Question

15) Consider the following model: Output = A. H. VK Where A is the level of technology, H is the level of human capital, and K is the level of capital. Fill in the table below given that H=5 and A=4: K Total output Marginal output The marginal output for K=4 is: A) 4.159 B) 4.359 C) 5.159 D) 5.359

Answer 1

Answer: D) 5.359

Output = A.H. √K

H = 5 ; A = 4

The marginal output is the change in total output for the change in one additional unit of capital, keeping level of technology and level of human capital constant.

K	Total Output	Marginal Output
0	4 * 5 * √0 = 0	-
1	4 * 5 * √1 = 20 * 1 = 20	20
2	4 * 5 * √2 = 20 * (1.41421) = 28.2842	8.2842
3	4 * 5 * √3 = 20 * (1.73205) = 34 . 641	6.3568
4	4 * 5 * √4 = 20 * 2 = 40	5.359

From the table above we see that the marginal output for K = 4 is 5.359.

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