Midterm control

Find the efficiencies A1 , A2 , and the limits M1 and M2 .
Solution

It can be seen that the limit efficiency of the i-resource is different from the average efficiency, usually M  A, (i 1,2) i i inequality is fulfilled for all production functions. The ratio of the limit efficiency of the i-resource to its average efficiency is called the elasticity of production volume i - resource costs and it is written as follows:

In this case, E_i - i is the percentage change in output when the cost of resource i changes by 1 percent (remaining the other resources unchanged). E₁  E₂  E _x is called aggregate production elasticity.

As an example, for the Cobb-Douglas function, we calculate labor productivity for each resource and the limit rate of resource substitution. Let the Cobb-Douglas function look like this: y=x₁^0.75 *x₂^0.25


Example 3.
Information on the rate of growth of the nominal monthly salary for 10 months of the current year compared to the level of December last year in percentage terms is given.

Months	Growth rate of nominal monthly salary	Months	Growth rate of nominal monthly salary
January	82.9	June	121.6
February	87.3	July	118.6
March	99.4	August	114.1
April	104.8	September	123.0
May	107.2	October	127.3

Plot the table data on a graph.

Solution