Question: To produce cake, you need eggs E and premixed ingredients I. Every cake needs exactly one egg and one package of ingredients. When you add
To produce cake, you need eggs E and premixed ingredients I. Every cake needs exactly one egg and one package of ingredients. When you add two eggs to one package of ingredients, you produce only one cake. Similarly, when you have only one egg, you can't produce two cakes even though you have two packages of ingredients.
a) Draw several isoquants of the cake production function.
b) Write a mathematical expression for this production function. What can you say about returns to scale of this function?
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