Question: Problem 1. [Producer Behavior and Cost Function] Suppose you are an economic consultant for the firm Gazelle that produces bicycles in the Netherlands. Their production

Problem 1. [Producer Behavior and Cost Function] Suppose you are an

Problem 1. [Producer Behavior and Cost Function] Suppose you are an economic consultant for the firm Gazelle that produces bicycles in the Netherlands. Their production function is given by q(k,l)=3k1/5l1/5 where q is expressed as 1000 bicycles. The CEO of the company wants the company to grow and wants you to investigate the efficiency and profitability of the firm. (a) (5 points) Compute the Technical Rate of Substitution (TRS) of labor for capital. (b) (5 points) Are there increasing, decreasing or constant returns to scale? Will the CEO be pleased with your finding? (c) (5 points) Draw the two representative isoquants for this production function that correspond to the output levels q1

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