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- A. What is the net PW of machine B? B. Which of the following statements is CORRECT? C. What is the net PW of machine A?Suppose that the production function is given by Y=AK0.4N0.6. What is the percentage change in output if TFP declines by 43%? Write the answer in percent terms with up to two decimals (e.g., 10.22 for 10.22%, or 2.33 for 2.33%).Returns to scale in production: Do the following production functions exhibitincreasing, constant, or decreasing returns to scale in K and L? (Assume Ais some fxed positive number.)(a) Y = K1/2L1/2(b) Y = K2/3L2/3(c) Y = K1/3L1/2(d) Y = K + L(e) Y = K + K1/3L1/3 (f ) Y = K 1/3L2/3 + A (g) Y = K 1/3L2/3 − A
- Returns to scale in production: Recall that a production function F(K, L) exhibits constant returns to scale if doubling the inputs leads to a doubling of output. If it leads to more than doubling of output, there are increasing returns to scale; if it leads to less than doubling of output, there are decreasing returns to scale. The answers to parts (a) and (f) are worked out below. (a) Y = K1/2L1/2. If we double K and L, output is (2K) 1/2(2L) 1/2 = 21/221/2K1/2L1/2 = 21/2+1/2K1/2L1/2 = 2K1/2L1/2. So output exactly doubles, and there are constant returns to scale. (b) Y = K1/3L2/3 + . This production function says you get units of output “for free,” that is, even if there is no capital and no labor. Then you produce on top of that with a Cobb-Douglas production function. If we double K and L, output is Notice that the first term is doubled, but the output we got for free (the A) is left unchanged. Therefore, output is less than doubled, and this…Does this production function q = 9K0.8L0.1 exhibits [increasing return to scale, constant return to scale, decreasing constant return to scale]Which of the following production functions exhibits constant return to scale? A) q=KL B) q=KL0.5 C) q=K+L D) q=log(KL)
- A19 Subject - economics Consider a constant returns-to-scale production function f(k, l). Show that f(k, l) = k ∂f/ ∂k + l ∂f /∂lSuppose that a business incurred implicit costs of $200,000 and explicit cost of$1million in a specific year if the firm sold 4,000 units of the output at $300 per unit , the accounting profits were A)$00,000 and it's economic profits were zero B)$200,000 and it's economic profits were zero C)$100,000 and it's economic profits were$100,000 D)zero and it's economic loss was $200,000Consider a Cobb-Douglas production function, Y=zKα(Nd)1−α, with 0< α <1. (a) Show that this production function exhibits constant returns to scale. (That is, show that when K becomes xK and Nd becomes xNd, Y becomes xY for x > 0. (b) What is MPN? Is it increasing or decreasing in Nd?
- The aggregate production function is Y = 3KL. If there are 20 units of capital and 50 units of labor, what is labor productivity? Group of answer choices 250 150 60 100Questions 3. For each of the following production functions, determine whether it exhibits increasing, constant or decreasing returns to scale: a) Q = K + L b) Q = L + L/K c) Q = Min(2K,2L) d) Q = (L.5 )(K.5)A firm produces using a production function given by F(K, L)=ln(K42+40L). The firm employs 100 workers. The nominal wage rate is 10 and the price of its good is 2. The firm can increase its profit by a) Hiring more workers b) Firing some of its workers c) It is already at the maximum profit d) We need to know the amount of capital to know how many workers it should hire