the marginal product of labor in the production of computer chips is 50 chips per hour. the marginal rate of technical substitution of hours of labor for hours of machine-capital is 1/4. what is the marginal product of capital?
2007-03-24 05:13:41 · 2 answers · asked by beautiful 2 in Social Science ➔ Economics
37.5 chips
2007-03-24 05:23:56 · answer #1 · answered by Santa Barbara 7 · 0⤊ 0⤋
The marginal rate of technical substitution is the rate at which the firm can give up one input for one more unit of another input, holding output constant (like marginal rate of substitution on the consumption side).
So, MRTS = 1 hr of labor / 4 hours of capital = MPk/MPl
.25 = MPk/50 ---> MPk = 12.5
Without the math, you can just think that the machines have to run 4 hours to produce the same output as 1 hours of labor. You know 1 hour of labor can produce 50 chips -- so how many units per hour must the machines run to produce the same 50 chips in a 4 hour period.
2007-03-24 13:41:39 · answer #2 · answered by Cato 2 · 1⤊ 0⤋