Project Description: In this problem, you will investigate the return to scale of different production functions.
Steps to Perform:
Step	Instructions	Points Possible
1	Use a cell reference or a single formula where appropriate in order to receive full credit. Do not copy and paste values, as you will not receive full credit for your answers. Start Excel.	0
2	In cell E7, by using relative and absolute cell references, calculate the value of production functionq1 if the value of labor is in cellC7 and the value of capital is in cellD7. Copy the formula from cellE7 down the column to cellE9.	1
3	In cell F7, by using relative and absolute cell references, calculate the value of production functionq2 if the value of labor is in cellC7 and the value of capital is in cellD7. Copy the formula from cellF7 down the column to cellF9.	1
4	In cell G7, by using relative and absolute cell references, calculate the value of production functionq3 if the value of labor is in cellC7 and the value of capital is in cellD7. Copy the formula from cellG7 down the column to cellG9.	1
5	In cell G12,determine the return to scale of the production functionq1.	1
6	In cell G13, determine the return to scale of the production functionq2.	1
7	In cell G14, determine the return to scale of the production functionq3.	1
8	Save the workbook. Close the workbook and then exit Excel. Submit the workbook as directed.	0

Use a cell reference or a single formula where appropriate in order to receive full credit. Do not copy and paste values, as you will not receive full credit for your answers. Labor, L, and capital, K, are the only inputs in each of the following production functions below. For each production function, find the output associated with the following output combinations: L = 2, K = 2; L = 4, K = 4; and L = 8, K = 8. a. q1= (L + K)2 b. q2 = (sqrt(L) + sqrt(K))2 c. q3 = (20 + sqrt(L) + sqrt(K))2
	L	K	q1	q2	q3
	2	2
	4	4
	8	8
	Determine the return to scale of each production function.
	The production function q1 exhibits		returns to scale.
	The production function q2 exhibits		returns to scale.
	The production function q3 exhibits		returns to scale.

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