Consider the following production function f(x_1,x_2 )=Ax_1^ x_2^, where A, and are strictly positive constants,

Consider the following production function f(x_1,x_2 )=Ax_1^α x_2^β, where A, α and β are strictly positive constants, i.e., A, α, β0. Determine returns to scale for the distinct values of α and β. Suppose α = β=1/2 and A=1 and let (x_1,x_2;y) be a production plan. Suppose (4,4;4) is feasible. What about (9,8;8)?

Answer rating: 100% (QA)

Returns to scale are determined by the values of and If 1 and 1 then returns to scale are decre... View the full answer