> The production function for gadgets is: Q = Q(L, G) = L½ + G½ ne price of L is w = $2. The price of G is r = $3. Total cost is: C = 2L + 3G %3D > In this problem, first check for returns to scale. > Then find expressions for the cost-minimizing input levels (L*, G*) as functions of a target quantity of output (Qo). > Then find L* & G* for two different target levels of output. a. Prove that production of gadgets exhibits diminishing returns to scale. b. Find expressions for the marginal products of L and G. 1/2 + G MPL = %3D -/2 MPG =

> The production function for gadgets is: Q = Q(L, G) = L½ + G½ ne price of L is w = $2. The price of G is r = $3. Total cost is: C = 2L + 3G %3D > In this problem, first check for returns to scale. > Then find expressions for the cost-minimizing input levels (L, G) as functions of a target quantity of output (Qo). > Then find L* & G* for two different target levels of output. a. Prove that production of gadgets exhibits diminishing returns to scale. b. Find expressions for the marginal products of L and G. 1/2 + G MPL = %3D -/2 MPG =

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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