Suppose that the production function is
Y = AK1>4L3>4. Assume that A = 1,000, the
current level of the capital stock is $16,000
billion, and the labor force is 200 million
workers.
a. Find the marginal product of labor.
b. Graph the marginal product of labor.
c. Graph the production function, putting labor
on the horizontal axis and assuming that capital
is constant.
d. Now assume that the capital stock increases
to $20,000 billion. Show the effect of this
increase on your graph of the production
function. What effect did the increase in the
capital stock have on the marginal product of
labor?