Question: Suppose a firm has a production function given by Y = zF(K, N) = zK^1/2 * N^1/2 . (a) Prove that constant return to scale

Suppose a firm has a production function given by Y = zF(K, N) = zK^1/2 * N^1/2 .

(a) Prove that constant return to scale holds for the production function.

(b) Write down the firm's problem. What is the firm's optimality condition?

(c) Let K = 4, z = 1, and w = 1. Solve for the optimal labor demand.

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!

Q:

1 Ni Ml 5. Suppose a firm has a production function given by Y = zF (K, N) : zK (a) Prove that constant return to scale holds for the production function. (b) Write down the firm's problem. What is...

Q:

1 Ni Ml 5. Suppose a firm has a production function given by Y = zF (K, N) : zK (a) Prove that constant return to scale holds for the production function. (b) Write down the firm's problem. What is...

Q:

(24 + 4 points) Tax on labor income Consider an economy where the representative consumer has a utility function u (C, L) over consumption C and leisure L. Assume preferences satisfy the standard...

Q:

Consider an economy where the representative consumer has a utility function u (C; L)over consumption C and leisure L. Assume preferences satisfy the standard properties we assumed in class. The...

Q:

microeconomics Suppose your utility for having a net worth of m is (m) = In(m). Your net worth is $450,000. You are thinking about opening a Starbucks franchise, which will require an initial...

Q:

1. Show as we did for indifference curves, under what conditions we expect that (Hint: in your answers, you should, where appropriate, be referring to concepts such as the marginal rate of technical...

Q:

Chapter 5 Production, Cost, and Supply | 163 6. Suppose a firm has the production function KL 9 (K, L ) = (a) Does this production function exhibit decreasing, constant, or increasing returns to...

Q:

Economics 2. A firm has a production function given by the following table: Units of Labor 2 3 4 5 K=1 3 8 12 15 17 K=2 10 15 19 22 24 K=3 16 21 25 28 30 K=4 20 25 28 30 31 @ Suppose that K is fixed...

Q:

Kindly help me solve these Problem 2 (30 pts) Explain your answers! A firm has a production technology involving two inputs, capital (K) and labor (L). /(K; L) - K1/3LV/3. The price of capital is r;...

Q:

Assist, with these attached questions. Consider an economy with a representative consumer like the one described above, and a representative firm like The production function of the firm is given by...

Q:

Introduction to NCBI Gene Database

Q:

How does the IMC approach differ from the top-down media planning approach?

Q:

Progress: 2 4 / 5 5 items Question Content Area Which of the following taxpayers may file as a head of household in 2 0 2 4 ? Marco provides all of the support for his mother, Sienna, who lives by...

Q:

At a meeting, a service line manager with fewer patients than their capacity asks that the health care organization do more general advertising, "getting our name out in front of people, on...

Q:

4. Using the same examples you gave in question 3, try to identify circular sequences, i.e. A affects B, but B also affects A.

Q:

6. Give three examples that nothing (doing nothing) can function as a cause.

Q:

2. To store it and