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...
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
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? 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
a) Do the following production functions exhibit constant
returns to scale, increasing returns to scale, or decreasing
returns to scale? For full credit, show why.
1) Q= 10L^ 0.5K^0.3
2) Q= 10L^0.5K^0.5
3) Q= 10L^0.5K^0.7
4) Q= min{K, L}
b) Which objects pin down a_LC and a_KC? Explain carefully.
c) Why does labor being mobile across sectors automatically
imply revenue maximization for firms? Explain carefully.
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
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
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 = (L5 )(K5)
Do the following production functions have increasing,
decreasing, or constant returns to scale? Which ones fail to
satisfy the law of diminishing returns?
? = min(??, ??)
?=?10.3 ?20.3
?0.3
Select all of the production functions that exhibit constant
returns to scale.
Q = min{K,L}
Q = K + L
Q = (K + L)2
Q = KL
Q = min{2K,3L}
Q = K.3L.7
Q = 2K + L