Answer to Question #55319 in Microeconomics for mini

Question

Suppose the production function for cars is Q=LK where Q is the quantity of cars produced per year, L is the quantity of labour (person-hours), and K is the quantity of capital (machine-hours).

(a) Sketch the isoquant corresponding to the quantity of Q=24.

(b) Does the isoquant exhibit diminishing marginal rate of technical substitution (MRTS). Explain.

(c) Could isoquants relating to two different levels of output ever cross. Explain.

(d) Why must isoquant be downward sloping when both labour and capital have positive marginal products?

Answer 1

Production function for cars is Q=LK.
(a) The isoquant corresponding to the quantity of Q=24 will be downward-sloping and bowed-in.
(b) The isoquant exhibit diminishing marginal rate of technical substitution (MRTS), because we need to use less of K to use more of L.
(c) The isoquants relating to two different levels of output never cross.
(d) The isoquant will be downward sloping when both labour and capital have positive marginal products, because we need to use less of K to use more of L.