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Worksheet Partial in Derivatives

1. The document discusses partial derivatives and marginal products of inputs for production functions with multiple variables like labor (L) and capital (K). It gives the example production function Q = F(L, K) = L^1/3 K^2/3. 2. It defines marginal product of labor (MPL) and marginal product of capital (MPK) as the partial derivatives of the production function with respect to L and K, respectively. 3. It asks questions about finding the output, MPL, and MPK for the Cobb-Douglas production function given values for L and K, and using linear approximation to estimate output values.

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383 views2 pages

Worksheet Partial in Derivatives

1. The document discusses partial derivatives and marginal products of inputs for production functions with multiple variables like labor (L) and capital (K). It gives the example production function Q = F(L, K) = L^1/3 K^2/3. 2. It defines marginal product of labor (MPL) and marginal product of capital (MPK) as the partial derivatives of the production function with respect to L and K, respectively. 3. It asks questions about finding the output, MPL, and MPK for the Cobb-Douglas production function given values for L and K, and using linear approximation to estimate output values.

Uploaded by

Vanessa Hardjadinata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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National Taiwan University - Calculus 3 for Economics and Management

Worksheet : Partial Derivatives in Economics

Name: ID: Department:

Introduction.
Recall that derivatives can be used to describe the marginal cost for single variable cost functions. Analogously, the
partial derivatives of a production function can describe the marginal product of multiple inputs.

Suppose, for example, the output quantity Q depends on the labor L and capital K and is denoted as Q = F (L, K).
In the case, the marginal product of labor (MPL) ∆Q is the change in output due to an additional unit of
labor. i.e. ∆Q = F (L∗ + 1, K ∗ ) − F (L∗ , K ∗ ). If we suppose in addition that the input is divisible (that is, we can
let it be as small as we want), then the marginal product of labor is defined as the limit of the ratio of change in
output and change in labor :
∆Q F (L∗ + ∆L, K ∗ ) − F (L∗ , K ∗ ) ∂F ∗ ∗
lim = = (L , K ).
∆L→0 ∆L ∆L ∂L
∂F
Analogously, we define the marginal product of capital (MPK) as the partial derivative of the production
∂K
function with respect to K.
1 2
Question 1. Consider the Cobb-Douglas production function Q = F (L, K) = 3L 3 K 3 .
(a) What is the output Q when L = 125 and K = 1000? Compute the marginal product of labor and marginal
product of capital at (L, K) = (125, 1000).

(b) Use linear approximation to estimate the production Q when L = 128 and K = 998. Then compute the
exact value of F (128, 998) with a calculator.

F (L, K) F (L, K)
Question 2. Define the average product of labor to be , and the average product of capital to be .
L K

(a) Find all production functions for which the MPL is proportion to the average product of labor :
∂F F (L, K)
= αL · for some constant αL > 0.
∂L L

1
(b) Consider production functions that satisfy the following properties:
(i) Zero output if any of the inputs is absent : F = 0 if L = 0 or K = 0.
∂F F (L, K)
(ii) MPL is proportion to the average product of labor: = αL · for some αL > 0.
∂L L
∂F F (L, K)
(iii) MPK is proportion to the average product of capital: = αK · for some αK > 0.
∂K K
αL αK
Show that the Cobb-Douglas production function of the form F (L, K) = A · L K , where A is a
constant, is the only function that satisfies these properties.
If we further require F (λL, λK) = λF (L, K) for all λ > 0 (in this case, F is said to have constant
returns to scale), what is the value of αL + αK ?

Introduction. For a production function, the Marginal Rate of Substitution (MRS) of its inputs is the ratio
of its marginal products. To be specific, for a production function F (L, K), the MRS between the labor L and the
capital K is given by
MPL ∂F ∂F
M RSLK = , where M P L = and M P K = .
MPK ∂L ∂K
Question 3.
dK
(a) Consider the level curve (indifference curve) F (L, K) = Q0 . Compute the slope of its tangent line, , in terms
dL
of M RSLK . What does this slope indicate in economics?

1 2
(b) Given F (L, K) = L 3 K 3 . Compute M RSLK at (L, K) = (125, 1000). Find the tangent line of the level curve
F (L, K) = 500 at (L, K) = (125, 1000) and determine the concavity of this level curve.

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