Bridget's Brewery production function is given by Y(K,L) = 100(KL)^(3/4) where K is the number of vats she uses and L is the number of labor hours. (a) Does this production process exhibit increasing, constant or decreasing returns to scale? (b) Compute the marginal product of labour. . (c) Holding the number of vats constant at 8, is the marginal product of labor increasing, constant or decreasing as more labor is used?
Bridget's Brewery production function is given by Y(K,L) = 100(KL)^(3/4) where K is the number of vats she uses and L is the number of labor hours. (a) Does this production process exhibit increasing, constant or decreasing returns to scale? (b) Compute the marginal product of labour. . (c) Holding the number of vats constant at 8, is the marginal product of labor increasing, constant or decreasing as more labor is used?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter7: Economies Of Scale And Scope
Section: Chapter Questions
Problem 10MC
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Transcribed Image Text:Bridget's Brewery production function is given by
Y(K,L) = 100(KL)^(3/4)
where K is the number of vats she uses and L is the number of labor hours.
(a) Does this production process exhibit increasing, constant or decreasing returns to scale?
(b) Compute the marginal product of labour..
(c) Holding the number of vats constant at 8, is the marginal product of labor increasing, constant or decreasing as more labor is used?
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