Question: 5. (Extra credit) Consider the production function y=[al +(1-a)Kb] where y is output, L is labor input, K is capital input, and a, b, and

5. (Extra credit) Consider the production function y=[al +(1-a)Kb] where y is output, L is labor input, K is capital input, and a, b, and c are positive numbers. Under what conditions will the production function have the property constant returns to scale? Decreasing returns to scale? Increasing returns to scale? Show your work. (4 points)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

0.0 Problem 3 (5 points) Consider the production function "isoquant": Q (K,L)= KU'TLO'2 = 4.29, where K, L, and Q are capital input, labor input and the level of output, respectively. Calculate the...

Economics questions... . Suppose that a market is composed of two firms that simultaneously choose quantities. Firm 1 has 22 a cost function C1(q1) = q1^2. Firm 2 has a cost function C2(q2) =...

Answer all questions .,,, 1. A perfectly competitive firm produces output q with capital K and labor Laccording to the production function: 9 = f(K,L)= 4K "L/4)*L "1/4) Ihe price of labor is w = 4,...

All questions are included with the pictures attached to the question. 00W} COW} UOW> UOW> UOW> UOW> 1 If the price of automobiles were to decrease substantially, the demand curve for public...

make sure to tackle al (i) According to the Ramsey model, what is the impact of a "fiscal stimulus" on investment, consumption and output if the stimulus is financed with lump-sum taxes? What if it...

1. (27 points) For each of the following production functions, sketch a representative isoquant (2 points). Calculate the marginal product for each input, and indicate whether each marginal product...

1. A 10 year bond, which has just been issued, provides semiannual coupons of 6% a year in arrears. It is redeemed at par. What price is paid (per $100 nominal value) if bond yields an annual...

solve the following c Consider a simple utility function for two goods, x1 and x2: u = (x1 1) 1 (x2 2) 2 , with 1 > 0, 2 > 0. The parameters 1 and 2 are constants, but they could be positive or...

7. After writing your personal vision, what must you do to achieve it? A. Commit to your vision through hard work and dedication. B. Put your vision in a safe space and look at it again in five...

Please find the question in the three attachments. Please answer all 4 parts a) b) c) and d) and give full step-by-step detailed procedures. Firm A's monthly production data is available in the third...

Company K operates in a jurisdiction that levies an income tax with the following rate structure: Bracket Income from 0 to $75,000 Income from $75,001 to $150,000 Income in excess of $150,000 Company...

Least Squares Calculation Obtain the least squares approximation k + mx for the data that follows. Plot the points and the line y1133 0123

5. Canadas forestry industry (composed mainly of those involved in the lumber industry) directly employs about 370,000 workers and indirectly employs an additional 510,000 people in support services....

What can the project manager do to enhance interaction with other organizational departments with regard to their resources

2. In this chapter, the reader should reflect on the following concepts: Context, winwin, win-lose, ambiguity, mental model, point of reference.

2. In this chapter, the reader should reflect on the following concepts: Patterns, symmetrical relationships, complementary relationships.

1. To provide insight into how setting an overly narrow boundary can give a mes-sage a specific meaning, while setting a wider boundary can give a completely different meaning.