3. Explain the production expansion path below in Figure 2:Figure 2Capitalper week4321III0 1 2 3 4q=40q=30q=10= 20d) There are decreasing returns to scalea) Output is increasing at a decreasing rateb) There are increasing returns to scalec) There are constant returns to scaleLaborper week4

This question asked us to explain the characteristics of the production expansion path shown in…

Explain the production expansion path below in Figure 2: Figure 2 Capital per week 4 3 2 1 I I A=20 q10 0 1 2 3 4 q=40 q=30 d) There are decreasing returns to scale Labor per week a) Output is increasing at a decreasing rate b) There are increasing returns to scale c) There are constant returns to scale

Explain the production expansion path below in Figure 2: Figure 2 Capital per week 4 3 2 1 I I A=20 q10 0 1 2 3 4 q=40 q=30 d) There are decreasing returns to scale Labor per week a) Output is increasing at a decreasing rate b) There are increasing returns to scale c) There are constant returns to scale

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 28RQ: What shape of a long-run average cost curve illustrates economies of scale, constant returns to...

See similar textbooks

Related questions

Q: Suppose a firm uses capital K and labor L to produce output Q with the following production…

A: ***Since the student has posted a question with multiple subparts, the expert is required to solve…

Q: Which of the following production functions demonstrates constant returns to scale? I. Q=5L+2K II.…

A: Constant returns to scale condition.Q(λK,λL)=λQ(K,L)

Q: Suppose that the production function is q=f(L, K) = La + Kª, where a>0. For what range of values of…

A: The production function exhibits increasing returns to scale when the increase in input by 'm' times…

Q: Which of the following production functions exhibit constant returns to scale? In each case y is…

A: Given: The production functions are: 1y=K12L132y=3K12L12(3)y=k12+L12(4)y=2K+3L

Q: 2. Let the production function be as follow: q(L,K) = 10.7 K0.3 Also assume w=2 and r=4 a. Find out…

A: Production costs allude to the costs an organization causes from assembling an item or offering a…

Q: Show that the elasticity of scale for a homogeneous production function of degree k is precisely k.

A: The elasticity of scale: Elasticity of scale measures the proportionate change in output due to…

Q: Question 2) Which of the following production functions is decreasing return to scale? (Q:Total…

A: To determine whether each of the given production functions exhibits decreasing returns to scale, we…

Q: ing to the long-run average cost cur

A: The cost of per unit output is known as the average cost. It directly depends on returns which…

Q: Which of the following production function exhibits constant returns to scale. a)q=KL b)q=KL^0.5…

A: A production function is a mathematical expression that depicts the relationship between inputs…

Q: A firm faces the production function: q=10L^0.32 K^0.56 (a) What kind of returns to scale does…

Q: 3.1 Consider the following production function: F(K,L) = K®.3L0.7 State if this function exhibits…

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

Q: A firm's production function is given by y(K, L) = 2√(KL) or 2(KL).5 (2 times the square root of the…

A: The Marginal Product of Labor (MPL) represents the change in output resulting from employing an…

Q: For the production function Q = 16L + 0.2K, returns to scale: O is decreasing can be increasing,…

A: Production function states the relationship between the input and output of goods in production by a…

Q: or each of the following production functions, determine whether it exhibits increasing, constant or…

A: The link between inputs (often labor and capital) and the output of goods or services generated by a…

Q: Q2. A firm's production function is Q = 9LZ+1)/10K(Y+1)/10 a) Find out AP of labour when K= 8 and L…

A: A firm's production function is Q = 9L(z+1)/10K(y+1)/10 Given that , Z = 0, Y = 9

Q: Production Point Capital (K) Labor (L) Output (Q) A 1 1 2 B 2 2 C 1 3 D 2 4 E 1 5 F 2 6 G…

A: Returns to scale can be classified into three categories; 1- Increasing returns to scale (IRS) 2-…

Q: Maize is produced according t8 lme q = 100(K° L°) %3D Starting with a capital input of 4 and a labor…

A: a production function gives the technological relation between quantities of physical inputs and…

Q: For each of the following production functions, determine if there are increasing. decreasing, or…

A: Returns to scale is an significnat term in economics which describe that how much the ouput will…

Q: a production function exhibits constant returns to scale, average cost will increase as output…

A: Production function, in financial matters, condition that communicates the connection between the…

Q: Looking at the following plot of a firm's production function, represented by isoquants for…

A: Isoquant is a contour line which shows different combinations of input producing the same level of…

Question

3. Explain the production expansion path below in Figure 2:
Figure 2
Capital
per week
4
3
2
1
I
I
I
0 1 2 3 4
q=40
q=30
q=10
= 20
d) There are decreasing returns to scale
a) Output is increasing at a decreasing rate
b) There are increasing returns to scale
c) There are constant returns to scale
Labor
per week
4

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introducing the question

VIEW

Step 2: Understanding the Production Expansion Path

VIEW

Step 3: Analyzing other options

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Do you think that the taxicab industry in large cities would be subject to significant economies of scale? Why or why not?
What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
What is a production function?
What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?
Are fixed costs also sunk costs? Explain.
How does fixed cost affect marginal cost? Why is this relationship important?
What is a long-run average cost curve?
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the…
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 1 74°F Clear 2 3 440 620 800 Q = 200 280 380 480 Average Total Cost (Dollars per bike) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 280 Q = 600 800 620 440 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $440 per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using one factory On the following graph, plot the three SRATC curves for Ike's Bikes from the…
The figure to the right illustrates the long-run average cost curve for a company that makes motors. Suppose the company produces & thousand moters per month. Is it experiencing economies of scale, diseconomies of scale, or constant returns to scale? If the company produces 4 theusand motors, then it experiences Average total cont 45.00 44.00 40 00 36.00 32.00 28.00 24.00 20.00 16.00 12:00 5.00 4.00 0.00 Long-nun average cost 4610 12 14 16 18 20 Quantity (motors per month in 1,000)
2
Please see the attachment and answer the following questions (i) There are three curves with different colours Please give names to these curves. (ii)Looking at TP (Total Product) curve and MP(marginal product curve), determine (locate) the level of output(see horizontal axis) level at which diminishing returns to labour start. (iii) When MP=0, will the TP be maximum Yes or no (iv) Does marginal product curve cut the maximum point of average product curve? This means both are equal. In the graph, at which level of output MP and AP are equa