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(Download PDF) Microeconomic Theory Basic Principles and Extensions 11th Edition Nicholson Solutions Manual Full Chapter
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CHAPTER 9:
Production Functions
Because the problems in this chapter do not involve optimization (cost minimization principles
are not presented until Chapter 10) they tend to have a rather uninteresting focus on functional
form. Computation of marginal and average productivity functions is stressed along with a few
applications of Euler's theorem. Instructors may want to assign one or two of these problems for
practice with specific functions, but the focus for Part 4 problems should probably be on those in
Chapters 10 and 11.
Comments on Problems
9.1 This problem illustrates the isoquant map for fixed proportions production functions.
Parts (c) and (d) show how variable proportions situations might be viewed as limiting
cases of a number of fixed proportions technologies.
9.2 This provides some practice with graphing isoquants and marginal productivity
relationships.
9.3 This problem explores a specific Cobb-Douglas case and begins to introduce some ideas
about cost minimization and its relationship to marginal productivities.
9.4 This problem involves production in two locations and develops the equal marginal
products rule.
9.5 This is a thorough examination of most of the properties of the general two-input Cobb-
Douglas production function.
9.6 This problem is an examination of the marginal productivity relations for the CES
production function.
9.8 Application of Euler's theorem to analyze what are sometimes termed the “stages” of the
average-marginal productivity relationship. The terms “extensive” and “intensive”
margin of production might also be introduced here, although that usage appears to be
archaic.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
88 Chapter 9: Production Functions
Analytical Problems
9.9 Local returns to scale. This problem introduces the local returns to scale concept and
presents an example of a function with variable returns to scale.
9.10 Returns to scale and substitution. Shows how returns to scale can be incorporated into
a production function while retaining its input substitution features.
9.11 More on Euler’s Theorem. Shows how Euler’s Theorem can be used to study the likely
signs of cross productivity effects.
Solutions
9.1 a., b.
k per Large-mower
period technology
10
Small-mower
8
technology
5 8 l per
period
With the small-mower technology, k = 1 and l = 1 are needed to mow 5,000 sq.
ft.. To mow 40,000 = 8 5,000, need to scale inputs up by 8, that is, k = 8 and
l = 8. Similar calculations show that with the large-mower technology, use
k = 10 and l = 5.
c. To mow half of the total 40,000 with each technology, use half of the inputs from
part b, so allocate k = 4 and l = 4 to the small-mower technology and k = 5 and
l = 2.5 to the large-mower technology, for a total of k = 9 and l = 6.5.
To mow only a quarter of 40,000 with the small-mower technology,
allocate a quarter of the inputs from part b ( k = 2 and l = 2 ) to production using
the small-mower technology and 3 4 of the inputs from part b ( k = 7.5 and
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Chapter 9: Production Functions 89
d. We know from part c that the combinations (k = 9, l = 6.5) and (k = 9.5, l = 5.75)
can be used to mow at least 40,000 sq. ft. Let’s take for granted for now that
40,000 is in fact the most that can be mowed with these combinations. Then both
these combinations are on the q = 40, 000 isoquant, as pictured in this graph:
Assuming that the isoquant is linear, one can use the point-slope form of a line to
show that the equation for the line between the two combinations is
40 2l
(1) k = − .
3 3
We made some assumptions to enable us to graph this isoquant, namely
that 40,000 was the most that could be produced by the input combinations and
that the isoquant was a line between the two points, not some other curve. The
formal proof that Equation (1) is the q = 40, 000 isoquant is hard. Let (k1, l1 ) be
the inputs used in the small-mower technology and (k2 , l2 ) in the large-mower
technology. Letting (k , l ) be the total input combination, we have
(2) k = k1 + k2
(3) l = l1 + l2 .
Total output of 40,000 is the sum of the output from technologies 1 and 2, both
Leontieff:
k
(4) 40, 000 = 5, 000 min ( k1 , l1 ) + 8, 000 min 2 , l2 .
2
For efficient production, there should be no wastage, so
(5) min ( k1 , l1 ) = k1 = l1
k k
(6) min 2 , l2 = 2 = l2 .
2 2
Equations (2), (3), (5), and (6) are four equations which can be used to solve for
the four unknowns k1 , l1 , k2 , l2 in terms of k and l . Sparing the details, the
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
90 Chapter 9: Production Functions
solution is
k1 = 2l − k
l1 = 2l − k
k2 = 2l − 2k
l2 = k − l.
Substituting these solutions into Equations (5) and (6),
min ( k1 , l1 ) = 2l − k
k
min 2 , l2 = k − l.
2
Substituting these expressions back into Equation (4),
40,000 = 5,000 ( 2l − k ) + 8,000 ( k − l ).
One can rearrange this equation into Equation (1).
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Chapter 9: Production Functions 91
c. If k = 20,
TPl = 20l − .2l 2 − 320 = q
320
AP l = 20 − .2l −
l
MPl = 20 − .4l.
APl reaches a maximum at l = 40, q = 160. At l = 50, MPl = 20 − .4l = 0.
d. Doubling of k and l here multiplies output by 4 (compare parts a and c). Hence,
the function exhibits increasing returns to scale.
a. Given Sam spends $10,000 in total and equal amounts on both inputs, he spends
$5,000 on each. At the $50 per hour, he uses inputs k = 100, l = 100, and
produces output q = 10. Total cost is 10,000 (by design).
b. We have
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
92 Chapter 9: Production Functions
q
0.8
l
MPk = = .02
k k
0.2
k
MPl = .08 .
l
Setting these equal yields l k = 4. Substituting into the production function,
q = 10 = 0.1k 0.2 (4k )0.8 = 0.303k.
Solving, k = 33 and l = 132. Total cost is 8,250.
c. The cost savings in part b is 1,750. This can buy 35 more bar stools, for a total of
k = 68. Substituting k = 68 and l = 132 into the production function gives
q = 11.6, an increase in output from the 10 units produced in part a.
d. Carla’s ability to influence the decision depends on whether she provides a unique
input for Cheers. If she does, she can either resist increasing the number of stools
or can allow an increase in stools in exchange for a higher salary.
9.4 a. The firm should allocated labor such that MPl1 =MPl2 . Thus,
q1 q2
=
l1 l2
(10l10.5 ) (50l20.5 )
=
l1 l2
5l1−0.5 = 25l2−0.5
l1 1
= .
l2 25
a. f k = Ak −1l 0.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Chapter 9: Production Functions 93
f l = Ak l −1 0.
f kk = ( − 1) Ak − 2l 0.
f ll = ( − 1) Ak l − 2 0.
f kl = Ak −1l −1 0.
q k k
b. eq ,k = = Ak −1l = .
k q q
q l k
eq ,l = = Ak l −1 = .
l q q
c. f (tk , tl ) = t + Ak l .
q t t
eq ,t = lim = lim( + )t + −1q = + .
t →1 t q t →1 q
9.6 a. We have
q 1 1−
MPk = = k + l k −1
k
= q 1− k − 1
1−
q
= .
k
Similar manipulations yield
1−
q
MPl = .
l
implying
1
k
= RTS −1 ,
l
in turn implying
k 1
ln = ln RTS .
l −1
From Equation (9.34),
d ln ( k l ) 1
= = .
d ln RTS − 1
c. Computing elasticities,
−
q k q 1
eq ,k = = =
k q k 1+ (l k )
−
q 1 1
e q, l = = = .
1+ ( k l ) 1+ ( l k )
−
l
Putting these over a common denominator yields eq ,k + eq ,l = 1, which shows
constant returns to scale.
(
= 0 + t 1 kl + 2k + 3 tl , )
while
(
tf (tk , tl ) = t 0 + t 1 kl + 2k + 3 tl . )
For these two equations to be equal, 0 = 0.
c Footnote 6 provides the key formula in the special case of constant returns to
scale:
f f
= l k
f f kl
( 1 2 )( k l )1 2 + 3 ( 1 2 )( l k )1 2 + 2
= .
1 ( kl ) + 2 k + 3l ( 1 4 )( kl )
12 −1 2
For = 0, one of the factors in the numerator has to be 0. For this to be
true for all (k , l ) , either 1 = 3 = 0 or 1 = 2 = 0. In other words, 1 = 0 and
either 3 = 0 or 2 = 0.
For = 1, the numerator has to equal the denominator. Expanding out the
numerator gives
12 13 1 2
+ (l k ) (k l ) + 2 3
12
+
12
4 2 2
and the denominator gives
12 13 1 2
+ (l k ) (k l )
12
+
12
.
4 4 4
For these two expressions to be equal for all (k , l ) requires
13 = 12 = 2 3 = 0.
This condition holds if any two of the three parameters 1 , 2 , 3 are 0.
For = , the denominator must be 0. This only holds for all (k , l ) if the
second factor is 0, i.e.,
( 1 4 )( kl ) = 0.
−1 2
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
96 Chapter 9: Production Functions
Analytical Problems
a. If f (tk , tl ) = tf (k , l ), then
f (tk , tl ) t
eq ,t = lim
t →1 t f (tk , tl )
f (k , l )
= lim
t →1 f ( k , l )
= 1.
f (tk , tl ) t
b. eq ,t = lim
t →1 t f (tk , tl )
f f t
= lim k + l
t →1 k l f
= eq ,k + eq ,l .
c. We have
(1 + t −2 k −1l −1 ) t
eq ,t = lim
t →1
t q
t
= lim q 2 2t −3 k −1l −1
t →1
q
= 2qk −1l −1
1
= 2q − 1
q
= 2 − 2q.
Hence, eq ,t 1 for q 0.5, and eq ,t 1 for q 0.5.
d. The intuitive reason for the changing scale elasticity is that this function has an
upper bound of q = 1 and gains from increasing the inputs decline as q
approaches this bound.
a. Let denote the elasticity of substitution and RTS the marginal rate of technical
substitution associated with F . Then
F f −1 fl f
RTS = l = = l = RTS .
Fk f f k
−1
fk
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Chapter 9: Production Functions 97
= f (k , l ) a +b ,
where
a
= .
a+b
The formula
f f
(1) = k l
f f kl
can be applied to show the elasticity of substitution for f equals 1. Since F is
just f scaled by the exponent a + b, the preceding results imply that the elasticity
of substitution for F also equals 1.
A general CES function can be written
F (k , l ) = ( k + l )
= f ( k , l ) ,
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
98 Chapter 9: Production Functions
where
f (k , l ) = ( k + l ) .
1
The formula in Equation (1) above can be used to show that the elasticity of
substitution for this f is
1
= .
1−
Hence the elasticity of substitution for general CES function F is the same as this
.
a. By Euler’s Theorem: x f
i
i i =kf .
b. Using Young’s Theorem, we have f12 = f 21. For n = 2 and k = 1, the above
expression becomes
x12 f11 + 2 x1 x2 f12 + x22 f 22 = 0.
If we assume diminishing marginal productivity, then f11 , f 22 0. Since x1 and
x2 denote quantities, they are always positive numbers. Thus, in order for the
above relation to hold, f12 0. Therefore, with two inputs and constant returns to
scale, increasing one input must increase the marginal product of the other input.
If k 1, we have increasing returns to scale and
x12 f11 + 2 x1 x2 f12 + x22 f 22 = k (k − 1) f .
Since k 1, k (k − 1) f 0. As described above, under the assumption of
diminishing marginal productivity, f11 , f 22 0. Thus, f12 0.
If k 1, we have decreasing returns to scale and
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Chapter 9: Production Functions 99
for the expression in part a to hold. Therefore, at least one cross-partial derivative
must be positive. For the case of k 1, like in the case of only two inputs, the
sign for the sum of the cross-partial derivatives is ambiguous.
d. Given
n
f ( x1 , x2 ,..., xn ) = xii .
i =1
we have
n
f (tx1 , tx2 ,..., txn ) = t 1 + 2 +...+ n xii .
i =1
j i
fii = i ( i − 1) xii − 2 x j j
j i
x .
−1
fij = i j xii −1 x j j k
k
k j i
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
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IV
« Dii estis ».
On peut être un prophète sans être un saint. Cela s’est vu. Mais il
paraît impossible de n’être pas un prophète quand on est un saint.
Alors même qu’un saint n’annoncerait pas des événements futurs, il
est forcé de les préfigurer et de les configurer à son insu par la
précision de ses attitudes ou de ses gestes. Jeanne prophétisa non
seulement par ses paroles, mais par ses actes. Intuition de la
pensée d’autrui ; Perception à distance ; Prescience de l’avenir ;
telles furent les trois facultés puissantes proclamées d’abord par ses
paroles.
La première se manifesta par la révélation faite au roi d’un secret
intime qui était entre Dieu et lui, le secret d’une prière d’angoisse
que ne connaissait pas même son confesseur ; révélation qui
détermina l’hésitante volonté de ce pauvre prince. Le fait si connu et
si remarquable de la reconnaissance du dauphin au milieu de toute
sa cour n’en avait été que le préliminaire. D’autres preuves de cette
infaillibilité d’intuition démontrèrent par la suite que rien ne pouvait
être caché à l’admirable fille.
Les phénomènes de perception à distance ont rempli sa trop
courte vie. Vers le 13 mai 1428, Jeanne voulait qu’on écrivît à
Charles VII de bien se tenir et de ne pas livrer bataille avant la mi-
carême. C’était un premier avis prophétique. Le 12 février suivant,
1429, elle disait à Robert de Baudricourt : « En Nom Dieu, vous
mettez trop à m’envoyer, car aujourd’huy le gentil daulphin a eu
assez près d’Orléans un bien grand dommaige et sera il encore taillé
de l’avoir plus grand si ne m’envoyez bientost vers luy. » Ce jour-là,
six ou sept mille Français, ayant à leur tête les plus vaillants
capitaines, étaient mis en déroute par 1.500 Anglais embarrassés
d’un long convoi de vivres. C’est la célèbre journée dite des
Harengs. De Vaucouleurs et à l’heure où l’événement se produisait,
Jeanne voyait la défaite de Rouvray-Saint-Denis. Un fait du même
ordre est l’indication de l’épée de Sainte-Catherine de Fierbois, fait
étonnant dont presque tous les chroniqueurs ont parlé.
Les mêmes éclairs prophétiques illuminent les champs de
bataille ; ils dirigent particulièrement la première opération militaire
de l’héroïne. Le 4 mai 1429, Falstaff amenait aux Anglais des vivres
et des hommes. On avait promis à Jeanne de l’avertir de l’heure où
commencerait l’attaque de ce convoi. Mais l’action fut engagée à
son insu. Entre temps, d’Aulon, son écuyer, lequel « était las et
travaillé », s’était étendu sur une couchette dans la chambre de la
jeune fille, « pour ung pou soy reposer ». Jeanne et son hôtesse
dormaient pareillement sur un autre lit. Soudain un appel mystérieux
la réveille. « En Nom Dé ! » crie-t-elle à d’Aulon, « mon conseil m’a
dit que j’aille contre les Angloys, mais je ne scay si je doy aler à
leurs bastilles ou contre Falstaff qui les doibt ravitailler. Sur quoy se
leva ledit écuyer incontinent et le plus tost qu’il peust arma ladicte
pucelle. » Puis, malgré la distance, celle-ci connaît que les soldats
sont repoussés de la bastille Saint-Loup et s’adressant à d’Aulon :
« Ha ! sanglant garçon, vous ne me disiez pas que le sang de
France fût répandu ! Allez quérir mon cheval. » Elle court vers la
porte de Bourgogne, « allant aussy droit comme si elle eust sçu le
chemin auparavant », si vite que les étincelles jaillissaient du pavé,
et la victoire est le résultat de cette illumination soudaine.
Cette faculté servit toujours ainsi les intérêts de Charles VII
jusqu’au jour où son inertie fut invincible. Circonvenu par ses
ministres, il tenait avec eux force délibérations secrètes. Jeanne
arrivait infailliblement au milieu de la discussion. « Ne tenez pas
davantage de si interminables conseils », disait-elle, « mais venez au
plus vite pour prendre votre digne sacre. » Ou encore : « Vous avez
été à votre conseil, j’ai été au mien. Or croyez que le conseil de mon
Seigneur tiendra et que le vôtre périra. » On reprenait la marche en
avant, mais c’était toujours à recommencer. L’esprit de prophétie de
Jeanne était à la fois lumière et force motrice.
On ne finirait pas s’il fallait dire toutes les rencontres où sa claire
vue de l’avenir se manifesta. Dès 1424, n’ayant alors que douze
ans, elle connut le secret de sa vocation. Mais elle ne le révéla qu’en
1428. Ce fut l’aurore. Au mois de mai, on l’a vu, elle déclarait au sire
de Baudricourt, qu’il fallait mander au dauphin que le Seigneur lui
donnerait secours avant le milieu du carême ; qu’il deviendrait roi en
dépit de ses ennemis, qu’elle-même le mènerait au sacre. Rebutée
d’abord comme une folle, elle insiste, elle précise, disant qu’on tarde
trop à l’envoyer, que déjà le prince a eu grand dommage de ce
retard et qu’il est en péril de l’avoir plus grand. Intimidé, Baudricourt
finit par céder.
Au départ, on lui représente les dangers du voyage. « J’ai mon
chemin ouvert », répond-elle. « En Nom Dieu menez-moy devers le
roy et ne faictes doubte que vous ne moy n’aurons aucun
empeschement. » Onze jours durant, Jeanne et ses compagnons
traversèrent impunément les lignes anglaises, les régions où
« régnaient toutes pilleries ou roberies ».
A Chinon, dès son arrivée, se produisit un incident qui frappa tout
le monde. Un soudard à cheval, la voyant passer, se met à crier sur
elle, ricanant et blasphémant. « Ho ! » dit-elle, « en Nom Dieu, tu le
renyes et tu es si près de ta mort !… » Le soir même, cet homme
tombait dans la Vienne et s’y noyait.
Devenue général d’armée, elle voulait entrer dans Orléans
assiégée avec une poignée de soldats par la rive droite de la Loire, à
travers les plus fortes bastilles anglaises. Par ce point, Orléans était
inaccessible ; mais elle savait, en dehors de tout raisonnement, et
elle affirmait que les troupes passeraient sans être inquiétées. Les
capitaines élaborent un autre plan ; peu importe, elle a vu juste et
l’armée de Blois, pour pénétrer dans la ville, est obligée de suivre la