Marginal product theory, Microeconomics

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Marginal Product Theory

a.    What is the MC of output in the short-run?

b.    What is the MC of labor (employed)?

c.    What is the short-run profit-maximizing decision with regard to Q? ...with regard to E?

d.    What is the 'marginal benefit of a worker' to the firm, and what is its relation to the 'marginal benefit of output' to firms?

e.    Why does the short-run demand curve have a tilt on the lower end of it? Specifically, why does the price of output change?

f.     What is the long-run profit-maximizing condition for the demand of inputs (labor and capital)?

2.    Question on a Specific Production Function

A firm has the following production function Q(E,K):

287_Marginal Product Theory.png

a. If the firm is maximizing profit in a competitive market for output and inputs, then what are the price of labor (w) and capital (r) at input combination (E,K) = (4.3, 6.41) and a total cost (TC) of $38.58?

b. What is the total output of production in (a)?


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