1. Consider a firm that has the following production function: 9=5L314K114 a. In the short run,...

 

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1. Consider a firm that has the following production function: 9=5L314K114 a. In the short run, K is fixed at 16. Solve for the short run production function and illustrate it in a graph. b. Does the firm's production function exhibit diminishing marginal returns to labor? Explain briefly. c. Suppose instead that L is fixed at 1 and K is variable. Does the firm's production function exhibit diminishing marginal returns to capital? Explain briefly. d. Suppose we are in the long run and neither input is fixed. Solve for the marginal rate of technical substitution (MRTS) between K and L. Does the firm's production technology exhibit a diminishing MRTS? e. Does the production technology exhibit decreasing, constant, or increasing returns to scale? 1. Consider a firm that has the following production function: 9=5L314K114 a. In the short run, K is fixed at 16. Solve for the short run production function and illustrate it in a graph. b. Does the firm's production function exhibit diminishing marginal returns to labor? Explain briefly. c. Suppose instead that L is fixed at 1 and K is variable. Does the firm's production function exhibit diminishing marginal returns to capital? Explain briefly. d. Suppose we are in the long run and neither input is fixed. Solve for the marginal rate of technical substitution (MRTS) between K and L. Does the firm's production technology exhibit a diminishing MRTS? e. Does the production technology exhibit decreasing, constant, or increasing returns to scale?

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Figure 1 Output 800000 600000 400000 200000 1 a Production function q A K 16 1000000 b The 200000... View the full answer