Question

#4

4. Apples are harvested by hand. Two workers and of apples per day. There is NO substitution between worker workers and one ladder are required to pick 100 pounds in Between workers and ladders. Graph the isoquants for 200, 400 and 600 pounds of apples per a . What is the marginal rate of technical substitution between labor tween labor and capital? -2 4 6 8 10 12 14 16 18 20 - 5. What is the difference between diminishing marginal product and diminishing returns to scale? Liminishing marginal Product occurs conen morginal Product of an input falls with rise in units of the Input employed occurs when morgia Piminishing returns to scale (sale of proble in all inputs input Falls with rise

Answer 1

A. This is an example of fixed proportions production function. You've been given 2 labor and 1 ladder and they cant be substituted. So if you have 2 labor, no matter how many ladders you get, the production will remain at 100 pounds. Similarly, no matter how many labors you get, if you have only 1 ladder, the production will be 100 only. This has been drawn below, for production of 200, 400 and 600 pounds of apples.

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The points A, B and C are the points where production is 200, 400 and 600, respectively. For producing 200 pounds, we will need 4 labors and 2 ladders. To produce 400 pounds, we will need 8 labors and 4 ladders. For 600 pounds production, we will need 12 labors and 6 ladders.

B. In cases of fixed proportion functions, the MRTS is either zero or $\infty$. If Z₁<Z_2, it is infinity. Z₁ and Z₂ are input functions, in our case these are labor and ladder. Since labor<ladder in our case, the MRTS is $\infty$.