he productivity of a country in Western Europe is given by the function f ( x ,
ID: 2886043 • Letter: H
Question
he productivity of a country in Western Europe is given by the function
f(x, y) = 40x4/5y1/5
when x units of labor and y units of capital are used.
(a) What are the marginal productivity of labor and the marginal productivity of capital when the amounts expended on labor and capital are 32 units and 1024 units, respectively? (Round your answers to two decimal places.)
(b) Should the government encourage capital investment rather then increased expenditure on labor at this time in order to increase the country's productivity?
Yes? No ?
labor ?? units capital ?? unitsExplanation / Answer
a)
f(x,y)= 40x^(4/5)y^(1/5)
marginal productivity of labor = 32*(1024/32)^(1/5) =64
marginal productivity of capital = 8*(32/1024)^(4/5) = 0.5
b)
NO, because capital investment is only giving 0.5 units., comapred to 64 units on labor.
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