A: Explain what Returns to Scale measures and distinguish between increasing, decreasing and constant Returns to...

A: Explain what Returns to Scale measures and distinguish between increasing, decreasing and constant Returns to Scale

B: Explain the relationship between Returns to Scale and Long Run Average Cost

C: Explain the relationship between Marginal Product of Labor and Marginal Cost.

D: Explain why a firm's marginal Cost curve represents its Supply Curve.

Expert Solution

Answer : Return to scale means that as input has been increased than the output has been increased in that phase.As return to scale means that there has been affected in the input as compared to there output level in an economy

Increasing return to scale means that when output increase at the more proportion as compared to an input level in an economy.As increasing return to scale shows when output increases more as compared to input level.

Constant return to scale means that when output increase at the same proportion as compared to an input level in an economy. As constant return to scale means that when output increases at the same level.

Decreasing return to scale means that when output increases less than as compared to an input level in an economy. As decreasing return to scale means that as when output increases at faster phase.

Answer B : Difference between return to scale and long run average total cost are :

Return to scale means that in which proportion the output has been increased at the input level where as long run average total cost means that when the firm can choose its level of fixed cost as accumulated when firms change production level over time in a particular time period.

Answer C :marginal product is an extra output generated by one additional unit of input such as an additional worker where as marginal cost are additional cost involved in the production. Both are inversely related to each other in systematic manner.

Answer D : The marginal cost curve is a supply curve only in perfect competition firm equates price with marginal cost. This happens only because price is equal to marginal revenue for a perfect competitive fi

Rahul Sunny answered 2 years ago

Illustrate and discuss the difference between constant, Increasing and decreasing returns to scale.

With appropriate examples, define increasing returns to scale, decreasing returns to scale and constant returns to...

With appropriate examples, define increasing returns to scale, decreasing returns to scale and constant returns to scale. (Please write out answer versus charting it)

1: Do the following functions exhibit increasing, constant, or decreasing returns to scale? What happens to...

1: Do the following functions exhibit increasing, constant, or decreasing returns to scale? What happens to the marginal product of each individual factor as that factor is increased, and the other factor is held constant? a. q = (L 0.5 + K 0.5) 2 b. q = 3LK2 c. q=L0.3 K 0.6

Show whether the following production functions exhibit increasing, constant, or decreasing returns to scale. a. Q...

Show whether the following production functions exhibit increasing, constant, or decreasing returns to scale. a. Q = 2L + 3K b. Q = L + 5K + 10 c. Q = min (2*L, K) d. Q = 10*K*L e. Q = L2 + K2 f. Q = K.5*L.5/2 + 10

Do each of the following production functions exhibit decreasing, constant or increasing returns to scale? Prove...

Do each of the following production functions exhibit decreasing, constant or increasing returns to scale? Prove your answers. • Q = .5L.34 + K.34 • Q = [min (K, 2L)]2 • Q = (0.3L.5 + 0.7K.5)2 • Q = 4KLM where K, L, M are inputs

3. Do each of the following production functions exhibit decreasing, constant or increasing returns to scale?...

3. Do each of the following production functions exhibit decreasing, constant or increasing returns to scale? Prove your answers. • Q = .5L^.34 + K^.34 • Q = [min (K, 2L)]^2 • Q = (0.3L^.5 + 0.7K^.5)^2 • Q = 4KLM where K, L, M are inputs

Show whether each of the following production functions exhibit increasing, decreasing or constant returns to scale....

Show whether each of the following production functions exhibit increasing, decreasing or constant returns to scale. Q = 0.5KL [2.5 Marks] Q = 2K + 3L [2.5 Marks] A firm has the following production function Q = 2(XY) 0.5 Where, X is maize and Y is rice. The cost of maize is K10 and the cost of rice Is K40. The firm has a budget of K80 to spend on the two goods. Formulate the firms’ optimization problem. [5...

What is the difference between diminishing returns and decreasing returns to scale? What kind of returns...

What is the difference between diminishing returns and decreasing returns to scale? What kind of returns to scale are possible in a school? Why?

Show whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L.

Show whether the following production functions exhibit increasing, constant, or decreasing returns to scale in K and L. Note: “exponents add up to one, so it CRTS” is not an acceptable answer. a. Y=(K1-a + L1-a ) 1/a b. Y=K/L c. Y=K1/4L3/4

5. (i) Do the following functions exhibit increasing, constant, or decreasing returns to scale? (ii) Do...

5. (i) Do the following functions exhibit increasing, constant, or decreasing returns to scale? (ii) Do the following functions exhibit diminishing returns to labor? Capital? Show how you know. a. q = 2L^1.25 + 2K^1.25 b. q = (L + K)^0.7 c. q = 3LK^2 d. q = L^1/2 K^1/2

Question