For the CobbDouglas production function in Problem 6.7, it can be shown (using calculus) that MPK =
Question:
MPK = aKa1 Lb
MPL = bKa Lb1
If the CobbDouglas exhibits constant returns to scale (a þ b ¼ 1), show that
a. Both marginal productivities are diminishing.
b. The RTS for this function is given by
RTS = bK/aL
c. The function exhibits a diminishing RTS.
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a If a b 1 MP K a LK b MP L bKL ...View the full answer
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Related Book For
Intermediate Microeconomics and Its Application
ISBN: 9780324599107
11th edition
Authors: walter nicholson, christopher snyder
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