Define the production function. Discuss why the production function exhibits diminishing returns. What is job rationing...

Define the production function. Discuss why the production function exhibits diminishing returns.

What is job rationing and how does it relate to unemployment? What factors can lead to job rationing? Briefly explain these factors.

Solutions

Expert Solution

Question - 1 and 2 are totally different questions. They are not the sub part of each other. So, i can solve one of them. Here, the answer of first question.

(1.) The Production functions show that output is the function of different factors of production used in the production process. The factors which generally used to describe the Production functions is Capital (K) and Labor (L). The production function can be represented by the following equation:

The production function exhibits diminishing returns, when the proportion by which we increase our factors of production (i,e L and K), the output not increase by the proportion of factor increase.

For more clear understanding, suppose we have production function =

Now, if we increase Capital (K) and Labor (L) both by 4 times. But output increase by less than 4 times. In such situation, the production function exhibits diminishing returns.

Rahul Sunny answered 9 months ago

Next > < Previous

Related Solutions

In that law, we see increasing returns at the start of production, production then exhibits diminishing...

In that law, we see increasing returns at the start of production, production then exhibits diminishing returns until it peaks, and then will exhibit negative returns if we attempt to push beyond that. Now, think about your work day - it could be a work day at your place of employment or a work day of school activities or a workday at home if you are a homemaker. Provide two examples of how your work day exhibits increasing returns, diminishing...

4. (a) If a production function exhibits increasing returns to scale and the quantity of all...

4. (a) If a production function exhibits increasing returns to scale and the quantity of all inputs is doubled, what happens to output? (b) If a production function exhibits increasing returns to scale and the scale of output is doubled, what happens to the average cost per unit produced

Prove that the following Cobb-Douglas function exhibits increasing returns to scale while having a diminishing marginal...

Prove that the following Cobb-Douglas function exhibits increasing returns to scale while having a diminishing marginal product of each factor: Y=x1.5x2.6

What happens with no diminishing returns? Consider a Solow model where the production function no longer...

What happens with no diminishing returns? Consider a Solow model where the production function no longer exhibits diminishing returns to capital accu- mulation. This is not particularly realistic, for reasons discussed in Chapter 4. But it is interesting to consider this case nonetheless because of what it tells us about the workings of the Solow model. Assume the production function is now Yt = AKt. The rest of the model is unchanged. (a) Draw the Solow diagram in this case....

8. Can a production function have diminishing marginal returns to a factor of production and constant...

8. Can a production function have diminishing marginal returns to a factor of production and constant returns to scale simultaneously? Why or why not?

Classical theory assumes the economy’s production function exhibits constant returns to scale. An example is the...

Classical theory assumes the economy’s production function exhibits constant returns to scale. An example is the Cobb-Douglas production function presented on pp. 61-62: Y = AKαL1-α MPL = (1 – α)Y/L MPK = αY/K A is greater than zero and measures the productivity of the available technology. The parameter α is a constant between 0 and 1 and measures capital’s share of income. Assume A = 1, α = 0.5, L = 64 and K = 4. Find the values...

What is the law of diminishing returns in production and how it affects the level of...

What is the law of diminishing returns in production and how it affects the level of output? You could use the marginal product of labour and the marginal product of capital. Topics are related to first half of the course and include theories and practices. Write an essay at least 2,000 words.

a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model,...

a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model, capital exhibits constant returns. What is the main implication of these differences to economic growth of a country/countries? b) Suppose unemployment rate in Sweden this year dropped to the lowest level ever than before. Oddly, employment rate also fell from the prior year. How was this possible?

assume that a firm has convex isoquants, and its production function exhibits decreasing returns to scale...

assume that a firm has convex isoquants, and its production function exhibits decreasing returns to scale (DRS). (10 pts) Draw an isoquant-isocost graph for two levels of output (q1=10 and q2=20) for this firm. Denote your cost-minimizing choices of capital and labor as (L1*, K1*) for output q1 and (L2*, K2*) for output q2. Use TC1 and TC2 to denote the total cost of each respective output level. (5 pts) How does your graph illustrate DRS? Explain. (5 pts) Using...

Between "Diminishing Returns and the Production Function" and Economies of Scale and Long-Run Costs", Which two...

Between "Diminishing Returns and the Production Function" and Economies of Scale and Long-Run Costs", Which two economics concepts of production theory can be used by business owners to decide on key issues affecting their firms? How these two concepts are related?

Subjects