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Suppose the Production Function for a Bakery Is

question 43

Essay

Suppose the production function for a bakery is:
Q = 4K0.4L0.6
where Q is the number of loaves of bread produced per day, K is the number of ovens, and L is the number of workers employed. Use calculus for the following:
a. determine a function for the marginal product of labor
b. determine a function for the marginal product of capital
c. find the marginal rate of technical substitution
d. discuss how MRTSLK changes as the firm uses more labor, holding output constant


Definitions:

Capital

The money and property that a business needs to operate.

Corporation by Estoppel

A legal doctrine that prevents a person from denying the corporate existence of an entity when they have treated it as a corporation.

Properly Incorporated

Refers to a company or entity that has been legally established and registered under the laws of its jurisdiction.

Valid Corporation

A legal entity that is properly incorporated under the laws of its jurisdiction, providing its owners with limited liability.

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