1. Imagine an economy with a constant returns to scale production function. Answer thefollowing:(a) Suppose this economy has 3000 units of physical capital, with workers having 200years of education, and they work 5000 hours. Their output is worth $10,000.Now imagine the same economy has 6000 units of physical capital, 400 years ofeducation, and the workers work 10000 hours. What is their output now?(b)b) Suppose this economy has 3000 units of physical capital, with workers having 200years of education, and they work 5000 hours. Their output is worth $10,000.Now, their physical capital grows to 6000 units, but the other two inputs remainthe same. Provide a range for what the economy's output might be. That is,what is the lower bound, and what is the upper bound for this economy's output?(c) Suppose this economy has 3000 units of physical capital, with workers having 200years of education, and they work 5000 hours. Their output is worth $10,000.Call this Country A. Now consider another economy with 1500 units of physicalcapital, with workers having 100 years of education, and they work 2500 hours.Their output is worth $5,000 Call this Country B. In which economy would anextra unit of physical capital more positively affect output?

Constant returns to scale refers to that technology /production function in which the output changes…

1. Imagine an economy with a constant returns to scale production function. Answer the following: (a) Suppose this economy has 3000 units of physical capital, with workers having 200 years of education, and they work 5000 hours. Their output is worth $10,000. Now imagine the same economy has 6000 units of physical capital, 400 years of education, and the workers work 10000 hours. What is their output now? b) Suppose this economy has 3000 units of physical capital, with workers having 200

1. Imagine an economy with a constant returns to scale production function. Answer the following: (a) Suppose this economy has 3000 units of physical capital, with workers having 200 years of education, and they work 5000 hours. Their output is worth $10,000. Now imagine the same economy has 6000 units of physical capital, 400 years of education, and the workers work 10000 hours. What is their output now? b) Suppose this economy has 3000 units of physical capital, with workers having 200

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which among these production functions exhibit increasing returns to scale? (Clue: you should scale each input by a factor strictly greater than 1) Select one: a. F(K,L) = 12K + 8L b. F (K,L) = K^2+L^2 c. F (K,L) = K+4L^2 d. F (K,L) = K/L (ii) Suppose that the number of people employed is equal to 160.0 million. The number of people unemployed and looking for a job is 58 million. The number of people not in the labor force is 60 million. How much is the adult population participation rate? Select one: a. 78.4%. b. 26.6%. c. 73.75%. d. 37.5%. (iii) Which one is not considered as money Select one: a. Gold coins b. A subway token in a subway system c. Cigarettes in prisoner of war camps d. A cheque %3D
> > Question 3 Which of the following production technology exhibits constant returns to scale? I. f(K, L)=K0.25 L0.75 II. f(K, L) = K0.75 0.75 III. f(K, L) = K0.25 0.25 Only (i) Only (ii) Only (iii) All of them. Question 4 Which of the following production technology exhibits increasing returns to scale? I. f(K, L) = K0.25 L0.75 II. f(K, L) = K0.75 0.75 III. f(K, L) = K0.25 0.25 Only (i) Only (ii) Only (iii) O All of them.
In each blank type increasing, decreasing or constant to describe the returns to scale of the given production function. 1 a. The production function Q 3 = 3L°K exhibits returns to scale. b. The production function Q = LK? exhibits c. The production function Q = 3L +K exhibits returns to scale. %3D returns to scale.
Given the following Cobb-Douglas production function, how much more output is produced by adding one more unit of capital (keeping labour constant) when K=100 and L=25? Y=4K0.5 L0.5 a.1 b.2 c.3 d.4
Maria produces pizzas using labor, an oven, and flour. When Maria uses 4 workers she can produce 100 pizzas per day. When she uses 8 workers, she can produce 175 pizzas per day. True or false: Maria's production function displays decreasing returns to scale. True or False
Use the diagram below to answer the questions that follow. Capital (machine hours) 6 A 10 10 15 Labor (hours) Capital (machine houn) What do the diagrams above illustrate? 10 10 B Labor (hours) decreasing returns to scale and B constant returns to scale constant returns to scale and B increasing returns to scale increasing returns to scale and B constant returns to scale increasing returns to scale and B decreasing returns to scale
Suppose the production function is given by G = 10K - 8L. What is the average product of capital when 2 units of capital and 10 units of labor are employed?
Suppose that a firm's production function is given by the following relationship: Q = 2.5√/LK (i.e., Q = 2.5L0.5 K0.5) where is output, L is labor input, and K is capital input. What is the percentage increase in output if labor input is increased by 10%? (Assume that capital input is held constant.) What is the percentage increase in output if capital input is increased by 25%? (Assume that labor input is held constant.) What is the the percentage increase in output if both labor and capital are increased by 10%? 11
Consider an economy that produces goods and services according to the production function F (L, K) = 90L Ki,where L represents the number of workers in an economy and K represents the combined units of physical and human capital. The marginal products of labour and capital are: (登) MPL = 60 30(£) MPK = Question 1 Initially: there are 27 workers and 64 units of capital. Part (a): What is the economy's real GDP and GDP per capita? 1st scenario Suppose L increases to 125 while capital remains constant at 64: Part (b): Calculate the economy's real GDP and GDP per capita. Part (c): Relative to the initial scenario (L = 27 and K = 64), how much did MPL change by? 2nd scenario Now suppose L remained constant at 27 workers and capital increased to 216 units: Part (d): Calculate the economy's real GDP and GDP per capita. Part (e): Relative to the initial scenario (L = 27 and K = 64), how much did MPK change by? 3rd scenario Finally, suppose L = 54 and K = 128. Part (f): Calculate the economy's…
2. Consider a Cobb-Douglas production function with three inputs. K is capital (the number of machines), L is labor (the number of workers), and H is human capital (the number of college degrees among the workers). The production function Y = K2/6 L3/6 H1/6 a) Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? (Hint: The marginal product of labor MPL is found by differentiating the production function (Y) with respect to labor (L)) b) Derive an expression for the marginal product of capital. How does an increase in the amount of human capital affect the marginal product of capital? (Hint: The marginal product of capital MPK is found by differentiating the production function (Y) with respect to capital (K)).
1. Suppose the production function is Q = 8L + 15K where Q is the quantity of output, L is the quantity of labor used in production, and K is the quantity of capital used in production. What can be said about this production function? It has Decreasing Returns to Scale It has Constant Returns to Scale It has Increasing Returns to Scale There isn’t enough information to determine the Returns to Scale for this production function 2. You’re dreaming of what to do during a nice summer day. You could mow the lawn which you would pay someone $15 to do for you. You could go for a walk which you value at $11. You could also take a nap and ignore everyone and everything else which you would pay $29 to do. If you to take a nap, what is your opportunity cost? Group of answer choices $29 $26 $15 $11
which of the following production functions is an increasing, decreasing or consistent return to scale please show your work a. y=L^0.3K^0.5 b. y= LK^0.5 c. y= L + K