Question: Given the production function Q=70K1/5L1/2, where Q is the output, K is capital and L is labour. a. This function is homogeneous. What is the

Given the production function Q=70K1/5L1/2, where Q is the output, K

Given the production function Q=70K1/5L1/2, where Q is the output, K is capital and L is labour. a. This function is homogeneous. What is the degree of homogeneity? Does it display decreasing, constant, or increasing returns to scale? [3 + 1 = 4 marks] b. If the target degree of homogeneity is 1 , then to what power L is needed to be raised, holding the power of the K same? [2 marks] Given the production function Q=70K1/5L1/2, where Q is the output, K is capital and L is labour. a. This function is homogeneous. What is the degree of homogeneity? Does it display decreasing, constant, or increasing returns to scale? [3 + 1 = 4 marks] b. If the target degree of homogeneity is 1 , then to what power L is needed to be raised, holding the power of the K same? [2 marks]

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