Question: 1. Use the production function Q=10K5 Le to complete the following production table. Rate of Capital Input (K) 6 24.5 5 4 3 2

1. Use the production function Q=10K5 Le to complete the following production

1. Use the production function Q=10K5 Le to complete the following production table. Rate of Capital Input (K) 6 24.5 5 4 3 2 1 10.0 1 30.3 2 27.3 3 56.3 4 45.5 71.8 29.3 6 5 Rate of Labour Input (L) (a) For this production system, are returns to scale decreasing, constant, or increasing? Explain. (b) Suppose the wage rate is GHe28, the price of capital also is GH28 per unit, and the firm currently is producing 30.3 units of output per period using four units of capital and two units of labour. Is this an efficient resource combination? Explain. What would be a more efficient (not necessarily the best) combination? Why? (HINT: Compare the marginal products of capital and labour at the initial input combination.)

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