(a)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(a)
Explanation of Solution
If the capital (K) and labor (L)are doubled, then the production function is as follows:
If the capital and labor are doubled, then the output will double and there are constant returns to scale.
(b)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(b)
Explanation of Solution
If the capital (K) and labor (L) are doubled, then the production function is as follows:
If the capital and labor are doubled, then the output will increase the returns to scale.
(c)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(c)
Explanation of Solution
If the capital (K) and labor (L) are doubled, then the production function is as follows:
If the capital and labor are doubled, then the output will increase the returns to scale.
(d)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(d)
Explanation of Solution
If the capital (K) and labor (L) are doubled, then the production function is as follows:
If the capital and labor are doubled, then the output will double and there are constant returns to scale.
(e)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(e)
Explanation of Solution
If the capital (K) and labor (L) are doubled, then the production function is as follows:
If the capital and labor are doubled, then the output will decrease the returns to scale.
(f)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(f)
Explanation of Solution
If the capital (K) and labor (L) is doubled, then the production function is as follows:
If the first term is doubled, the output
(g)
Explain whether the production function exhibits increasing, decreasing, or constant returns to scale.
(g)
Explanation of Solution
If the capital (K) and labor (L) are doubled, then the production function is as follows:
If the capital and labor are doubled, then the function exhibits constant returns to scale.
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