Problem
Consider the problem of maximizing y1 = f1(L1,K1), subject to the full-employment conditions L1+L2 1+K2 2 = f2(L2,K2). Set this up as a Lagrangian, and obtain the first-order conditions. Then use the Lagrangian to solve for dy1/dy2, which is the slope of the production possibilities frontier. How is this slope related to the marginal product of labor and capital?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.