Question1

I, Ans.

MPK

8.3 K

dQ
K

O.83 --1 0.22

8.3 --0.17L0.22

8.3
0.22
K 0.17 L

2, Ans. Q

10K0.83L0.22
Q
K

APK

10K0.83L22

10K0.83L0.22 K--1
10KO.831L0.22
10 L0.22
0.17
K
dQ/Q dQ Q
= =
dk /k dk K

3, Ans.

8.3 L0.22
0.17
K

EP

K 0.17
0.22
10 L

8.3
=0.83
10

EP 1 ( Inelastic )
Therefore the elasticity of production is inelastic with respect to capital.

4, Ans. it shows that percentage change in labor is more than the percentage change in
capital. The elasticity of production is 0.83. So it is less than zero so it is inelastic.
5, Ans. Return to the scale in the industry can be characterized when inputs are change
in the same proportion. In short run change in output is associated with the change in
output in the same proportion and change in output in the long run is associated with
change in the scale of production.

Question 2
1, Ans. The marginal product of the second, third and fourth worker might be higher
than the first one because when the number of additional labor increases the number of
helping hand increase it becomes more sufficient and effective. This results in increase
in the total output from the additional units of labor. MR. Tobgay also added second,
third and fourth workers in his business to increase his output from the additional units
of labor. When the number of worker is enough to meet the demand of the consumer
then the income of the business will increase.
The marginal product of additional workers to happen eventually because the marginal
product of a factor will change at different levels of employment of the factor .It has
been found that the marginal product of a factor rises in the beginning and ultimately
falls as more of it is used or added for production.
Question3.
Number

of Bukhari

MP

AP

Employees
1
2

10
18

10
9

3
4
5
6
7

24
28
30
28
25

6
4
2
-2
-3

8
7
6
5
4

Mp=
no.

change
of

in

bukhari/

no.change

in

employees
Ap

no

of

bukhari/ no of employees
2, Ans. Yes, this production function exhibit diminishing returns to the labor because as
the number of employee increases then the production of bukhari, first increase at
increasing rate at a certain point it falls down but remains positive. The contributions to
the production of bukhari made by the variable factor at a point become lesser and
lesser because the additional units of the variable factor have been lesser and lesser so
it works with the given fixed factor.

3, Ans. The marginal product of labor becomes negative because of the factor that the
number of variable factor becomes more relative than the fixed factor so that it result in
fall in total output instead of rising. When total output reaches the maximum the
marginal product will become zero and when total product falls then the marginal
product becomes negative. (ww.google.com, n.d.)

References
ww.google.com. (n.d.). Retrieved from www.economicsdicussion.ne:
http//en.m.wikipedia.org