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which of these production functions exhibits diminishing marginal product of labor? (a) y= 2k + 15L...

which of these production functions exhibits diminishing marginal product of labor? (a) y= 2k + 15L (b) Y= K^.5*L^.5 (c) Y= 2K^.5 + 15L^.5
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Answer #1

Marginal product of labor is the derivative of the production function with respect to labor. Find the MPL in all three cases

  • a) MPL = 15
  • b) MPL = 0.5*(K/L)^0.5
  • c) MPL = 15*0.5(1/L)^0.5

Now diminishing marginal product of labor implies MPL falls as L rises. In a), MPL is fixed so it does not show diminishing marginal product of labor. In b) and c) we see that as L rises MPL falls. Hence production functions b) and c) show diminishing marginal product of labor.

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