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1. As an extra tractor lead to an increase in revenue for a farmerin successive years of £500, £4000, £3,000, £3,000 and £1,000, after which the tractor is sold for £1,000. Assuming that the first revenue is treated as current and the interest rate is 8 per cent, the present value of the extra income stream is £1800.

2.If a new tractor costs £10,000 in the current period, would the purchase of the tractor increase the present value of profit

3. Suppose the production function is Q = 20(K^0.5 L^0.5) and the value of capital is 100. 
A.) Calculate the total product for the following values of labour input: 1, 5, 10,
20, 40, 50, 80, 100, 150, 200.
 B) Calculate the average product at each of these levels of output. 
C.) How does marginal product vary over this range of output?

Kindly show working.

Microeconomics, Economics

  • Category:- Microeconomics
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