Problems

P7.1 Marginal Rate of Technical Substitution. The following production table provides estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume that these are just illustrative points on a spectrum of continuous input combinations.)

Units of

Y Used Estimated Output per Day

5 210 305

4 188 272

3 162 234

2 130 188

1 94 130

360 421 470

324 376 421

282 324 360

234 272 305

162 188 210

Units of X used

A. Do the two inputs exhibit the characteristics of constant, increasing, or decreasing marginal rates of technical substitution? How do you know?

B. Assuming that output sells for $3 per unit, complete the following tables:

X Fixed at 2 Units

Marginal

Units of Total Product Marginal Product Average Product Revenue Product Y Used of Y of Y of Y of Y

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