(a) The most significant cost in family medicine practice is human resources. To treat twice as many patients, a medical clinic will probably need twice as many doctors, nurses, and other staff and other inputs in the long run. Does this business have economies of scale? Please explain.
(b). Consider the production function Q = 10L - 0.5L2 + 24K - K2, L=labor, K=capital.
MPL = 10 - L
MPK = 24 - 2K
(i) Does each input have diminishing marginal productivity? Please explain
(ii) Does this firm have increasing, constant, or decreasing returns to scale? Please explain