Science:Math Exam Resources/Courses/MATH105/April 2011/Question 08 (b)
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[hide]Question 08 (b) |
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The productivity (measured in the dollar value of goods produced) of a certain country is given by the function where denotes the amount (in dollars) invested in labor, and is the amount invested in capital. Recall that the marginal productivity of labor (respectively capital) is the rate of change of with respect to (respectively ), holding (respectively ) fixed. Suppose that the government has the following two policy options,
Using the marginal productivities obtained in part (a), find the approximations for the changes in productivity under each of these policies. Based on these approximations, which policy should the government encourage for higher productivity? |
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