Assume that machine (K) and labor (L) can be used as perfect complements to perform some administrative task. More precisely, assume that the output, i.e. the number of tasks performed per hour, is related to the inputs using the production function Q = 10min(K,L) a) Show two Isoquants corresponding to q = 40 and q = 80 on a graph. Are there Constant, Decreasing or Increasing returns to scale? Explain. %3D b) Suppose that the production function changes to Q=5(2K+L) over the course of a decade. Did technological progress take place? If so, what type of technological progress is it? Explain.
Assume that machine (K) and labor (L) can be used as perfect complements to perform some administrative task. More precisely, assume that the output, i.e. the number of tasks performed per hour, is related to the inputs using the production function Q = 10min(K,L) a) Show two Isoquants corresponding to q = 40 and q = 80 on a graph. Are there Constant, Decreasing or Increasing returns to scale? Explain. %3D b) Suppose that the production function changes to Q=5(2K+L) over the course of a decade. Did technological progress take place? If so, what type of technological progress is it? Explain.
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.1P
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