4. Consider the following production functions: i. f(L,K) = L2/3 K 1/4 ii. f(L,K) = 5L + K. a. Do they exhibit constant, increasing or decreasing returns to scale? Show your calculations and explain. [ b. Derive the marginal rate of technical substitution associated with the above production functions.
4. Consider the following production functions: i. f(L,K) = L2/3 K 1/4 ii. f(L,K) = 5L + K. a. Do they exhibit constant, increasing or decreasing returns to scale? Show your calculations and explain. [ b. Derive the marginal rate of technical substitution associated with the above production functions.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.9P
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Transcribed Image Text:4. Consider the following production functions:
i. f(L,K) = L2/3 K1/4
ii. f(L,K) = 5L + K.
a. Do they exhibit constant, increasing or decreasing returns to scale?
Show your calculations and explain.
b. Derive the marginal rate of technical substitution associated with the
above production functions.
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