Homework Help is Here – Start Your Trial Now!
Business
Economics
3.1 Consider the following production function: F(K,L) = K®.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production function: F(K,L) = K0.5L08 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K,L) = KªL°

3.1 Consider the following production function: F(K,L) = K®.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production function: F(K,L) = K0.5L08 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K,L) = KªL°

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter7: Production Economics
Section: Chapter Questions
Problem 7E
See similar textbooks
icon
Related questions
Question
Exercise 3 3.1 Consider the following production function: F(K,L) = K0.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production funetion: F(K,L) = K0.5L0.8 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K, L) = K°L Find out what relation should exist between a and b in order for this function to exhibit constant returns to scale. 3.4 Constant returns to scale is an assumption that fits the reality most of the times. But it does not always hold. Make an example of a firm or a type of business in the real world that exhibits increasing or decreasing returns to scale
Transcribed Image Text:Exercise 3 3.1 Consider the following production function: F(K,L) = K0.3L0.7 State if this function exhibits constant, increasing or decreasing returns to scale. 3.2 Consider the following production funetion: F(K,L) = K0.5L0.8 State if this function exhibits constant, increasing or decreasing returns to scale. 3.3 Consider the following production function: F(K, L) = K°L Find out what relation should exist between a and b in order for this function to exhibit constant returns to scale. 3.4 Constant returns to scale is an assumption that fits the reality most of the times. But it does not always hold. Make an example of a firm or a type of business in the real world that exhibits increasing or decreasing returns to scale
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Input Substitution
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:
9781305971493
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS