AGE 211 – 2024

Practical 1: Production functions and marginal returns

Question 1

Suppose you have the following data on an input, nitrogen (measured in kg per hectare) and the yield
levels for four different varieties of maize (measured in kg per hectare):

Nitrogen Maize var 1 Maize var 2 Maize var 3 Maize var 4

Row
(kg/hectare) (kg/hectare) (kg/hectare) (kg/hectare) (kg/hectare)
1 0 100 100 100 200
2 10 200 250 200 360
3 20 300 390 310 495
4 30 400 520 430 605
5 40 500 640 560 690
6 50 600 750 700 750
7 60 700 850 850 785
8 70 800 940 1 010 795
9 80 900 1 020 1 180 780

Maize variety 1 Maize variety 2

Maize variety 3 Maize variety 4

For each of these four production functions, explain whether you observe negative, diminishing,
constant, or increasing marginal returns. If any of the production functions has a combination of these,
say which.

Maize variety 1: ____________________________________________

Maize variety 2: ____________________________________________

Maize variety 3: ____________________________________________

Maize variety 4: ____________________________________________

Question 2

Suppose you have a production function of the form Y = 10 + 2*X - 0.1*X2, where X is the input per unit
area, and Y is the output per unit area.

2.1 Complete the table below by filling in the values in the right-hand (Y) column.

X Y
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14

2.2 Does this function exhibit diminishing marginal returns? How do you know?

2.3 Does it exhibit negative marginal returns? Justify your answer. How do you know?