According to data from the Longitudinal Survey of Companies of 2017, labor productivity in Chile is higher, on average, in larger companies, being large companies (86.5 million pesos per worker per year) almost 6 times more productive than microenterprises (15 million pesos per worker per year). Does this observation necessarily contradict the Law of Diminishing Returns? How could it be explained that workers are more productive in larger companies? 3. Boco has a very popular pastry shop in his neighborhood. To carry out his work, he hires two productive factors: kilos of flour (H) and hours of use of a mixing machine (M). Its production function is given by f (H, M) = [min (H, aM)] b with a greater than zero. Using this information, determine what kind of returns to scale the technology presents that Boco uses. 4. When all inputs have decreasing marginal productivities, then the production functions exhibit diminishing returns to scale. True or False. Justify your answer.

According to data from the Longitudinal Survey of Companies of 2017, labor productivity in Chile is higher, on average, in larger companies, being large companies (86.5 million pesos per worker per year) almost 6 times more productive than microenterprises (15 million pesos per worker per year). Does this observation necessarily contradict the Law of Diminishing Returns? How could it be explained that workers are more productive in larger companies? 3. Boco has a very popular pastry shop in his neighborhood. To carry out his work, he hires two productive factors: kilos of flour (H) and hours of use of a mixing machine (M). Its production function is given by f (H, M) = [min (H, aM)] b with a greater than zero. Using this information, determine what kind of returns to scale the technology presents that Boco uses. 4. When all inputs have decreasing marginal productivities, then the production functions exhibit diminishing returns to scale. True or False. Justify your answer.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.2P

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