For the following production functions, • find the marginal product of each input. • determine whether the production function exhibits diminishing marginal returns to each input. • find the marginal rate of technical substitution and discuss how mrts lk changes as the firm uses more l, holding output constant. a. q(k, l) = 3k + 2l b. q(k, l) = lok0 · 5 l0 · 5

Varto company has 9,400 units of its sole product in inventory that it produced last year at a cost of $23 each. this year’s model is superior to last year’s, and the 9,400 units cannot be sold at last year’s regular selling price of $42 each. varto has two alternatives for these items: (1) they can be sold to a wholesaler for $8 each, or (2) they can be reworked at a cost of $251,100 and then sold for $34 each. prepare an analysis to determine whether varto should sell the products as is or rework them and then sell them.