1. Suppose firms use two inputs, capital, K, and labour L to produce output. Their production functions are written as a function of K and L: F(K, L). For each of the following production functions, determine i) whether the production function exhibits increasing, decreasing, or constant returns to scale, and ii) if both inputs double, by what factor (how many times) output will increase. (a) F(K,L) = 5K² +31² (b) F(K, L) = 8K0.4 10.3 (c) F(K, L) = K2 (2K³ - L³)

1. Suppose firms use two inputs, capital, K, and labour L to produce output. Their production functions are written as a function of K and L: F(K, L). For each of the following production functions, determine i) whether the production function exhibits increasing, decreasing, or constant returns to scale, and ii) if both inputs double, by what factor (how many times) output will increase. (a) F(K,L) = 5K² +31² (b) F(K, L) = 8K0.4 10.3 (c) F(K, L) = K2 (2K³ - L³)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter7: Production Economics

Section: Chapter Questions

Problem 1.5CE

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