Suppose the production function of automobiles is given by a. Show that the marginal product of any given quantity of labor increases as capital is increased.
b. Suppose Japanese and U.S. automakers produce on identical isoquants with this Cobb-Douglas production function and that labor costs are higher in Japan than in the United States. Do autoworkers in Japan have a higher marginal product than American autoworkers? Explain carefully.
c. Now suppose Japanese automakers produce on a different isoquant from U.S. firms, but the prices of Japanese and American cars are identical. Do Japanese or American autoworkers have a higher marginal product? Why?

Question

Suppose the production function of automobiles is given by  a. Show that the marginal product of any given quantity of labor increases as capital is increased.
b. Suppose Japanese and U.S. automakers produce on identical isoquants with this Cobb-Douglas production function and that labor costs are higher in Japan than in the United States. Do autoworkers in Japan have a higher marginal product than American autoworkers? Explain carefully.
c. Now suppose Japanese automakers produce on a different isoquant from U.S. firms, but the prices of Japanese and American cars are identical. Do Japanese or American autoworkers have a higher marginal product? Why?

Quizplus · Accepted Answer

The Answer of Suppose the production function of automobiles is given by  a. Show that the marginal product of any given quantity of labor increases as capital is increased.
b. Suppose Japanese and U.S. automakers produce on identical isoquants with this Cobb-Douglas production function and that labor costs are higher in Japan than in the United States. Do autoworkers in Japan have a higher marginal product than American autoworkers? Explain carefully.
c. Now suppose Japanese automakers produce on a different isoquant from U.S. firms, but the prices of Japanese and American cars are identical. Do Japanese or American autoworkers have a higher marginal product? Why?

Suppose the Production Function of Automobiles Is Given by