Exercise 33.1 Consider the following production function:F(K,L) = K0.3L0.7State if this function exhibits constant, increasing or decreasing returns to scale.3.2 Consider the following production funetion:F(K,L) = K0.5L0.8State if this function exhibits constant, increasing or decreasing returns to scale.3.3 Consider the following production function:F(K, L) = K°LFind out what relation should exist between a and b in order for this function to exhibitconstant returns to scale.3.4 Constant returns to scale is an assumption that fits the reality most of the times. But itdoes not always hold. Make an example of a firm or a type of business in the real world thatexhibits increasing or decreasing returns to scale

disclaimer :- as you posted multipart questions we are supposed to solve the first 3 questions only…

3.1 Consider the following production function: F(K,L) = K®.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production function: F(K,L) = K0.5L08 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K,L) = KªL°

3.1 Consider the following production function: F(K,L) = K®.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production function: F(K,L) = K0.5L08 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K,L) = KªL°

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.14P

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