Question: 3. The production function for a country is: Y = K.31.7 (a) Does this function have constant returns to scale? Explain. (b) Assume now that

3. The production function for a country is: Y = K.31.7

3. The production function for a country is: Y = K.31.7 (a) Does this function have constant returns to scale? Explain. (b) Assume now that K is constant, that is, K = K. Calculate the marginal product of labor (MPL) as a function of labor and argue, by inspecting the function you obtain, that it is decreasing in labor. (c) If the total stock of capital is 100 units, the total amount of hours is also 100, and the price of output, Y, is $10, what are the firm's revenues? (d) What will the real wage and the real rental price of capital be in equilibrium (a situation where firms maximize profits under perfect competition, and markets clear, that is the demand for capital is equal to 100 and the demand for labor is equal to 100)? (e) What are the firm's costs in equilibrium (expressed in dollars)? What are the firm's profits

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3. An initial value (anchoring).