Consider the production function:

a. Compute output when \(K=49\) and \(N=81\).

b. If both capital and labor double, what happens to output?

c. Is this production function characterized by constant returns to scale? Explain.

d. Write this production function as a relation between output per worker and capital per worker.

e. Let \(K / N=4\). What is \(Y / N\) ? Now double \(K / N\) to 8 . Does \(Y / N\) double as a result?

f. Does the relation between output per worker and capital per worker exhibit constant returns to scale?

g. Is your answer to (f) the same as your answer to (c)? Why or why not?
h. Plot the relation between output per worker and capital per worker. Does it have the same general shape as the relation in Figure 10-4? Explain.

Figure 10-4

Transcribed Image Text:

Y = VK VN