Consider the following production functions, where q is the quantity produced of the good, K is the quantity of capital used, and L is the quantity of labor used: Production function 1: q (K, L) = KªLB Production function 2: q (K, L) = K² + L 1. Suppose that a = 1 and ẞ= 1. Does Production function 1 have decreasing, constant, or increasing returns to scale? Explain. 2. Suppose that a = 1 and ẞ= 1. Does Production function 2 have decreasing, constant, or increasing returns to scale? Explain. 3. Below is a Total Product table for production function 1 when a = 1 and ẞ = 1. KIL 1 2 3 455 1 12 3 4 5 16 2 24 6 8 10 12 3 36 9 12 15 18 st 48 12 16 20 24 5 5 10 15 20 25 30 6 612 18 24 30 36 Suppose that the level of capital is fixed at 5 units. What is the marginal product of labor (MPL) for each unit of labor employed? Does the MP, vary with number of units of labor used?

Consider the following production functions, where q is the quantity produced of the good, K is the quantity of capital used, and L is the quantity of labor used: Production function 1: q (K, L) = KªLB Production function 2: q (K, L) = K² + L 1. Suppose that a = 1 and ẞ= 1. Does Production function 1 have decreasing, constant, or increasing returns to scale? Explain. 2. Suppose that a = 1 and ẞ= 1. Does Production function 2 have decreasing, constant, or increasing returns to scale? Explain. 3. Below is a Total Product table for production function 1 when a = 1 and ẞ = 1. KIL 1 2 3 455 1 12 3 4 5 16 2 24 6 8 10 12 3 36 9 12 15 18 st 48 12 16 20 24 5 5 10 15 20 25 30 6 612 18 24 30 36 Suppose that the level of capital is fixed at 5 units. What is the marginal product of labor (MPL) for each unit of labor employed? Does the MP, vary with number of units of labor used?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Economic Growth: Resources, Technology, Ideas And Institutions

Section17.2: A Production Function And Economic Growth

Problem 4ST

See similar textbooks