Homework Answers
Yes, It is possible for a firm to have increasing returns to scale, constant returns to scale, and decreasing returns to scale with increasing output.
When a firm is in initial phases of production it has idle factors of production such as land and capital, the firm can increase input to increase its output with increasing returns to scale as marginal productivity of the variable input factor will increase at an increasing rate.
When increase in production of output is constantly increasing along with the variable input and marginal productivity of input also increases at a constant pace, the firm is producing at a constant returns to scale.
When the marginal productivity of the variable factor has peaked, it starts to decrease. This is decreasing returns to scale. Output will increase till marginal productivity of the variable factor reaches zero.
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1 Can an enterprise have production function, which exhibits increasing returns to scale, constant returns to...
Q#02 Check whether the following production function exhibits (10 Marks) Constant Returns to Scale Increasing Returns...
Q#02 Check whether the following production function exhibits (10 Marks) Constant Returns to Scale Increasing Returns to scale Decreasing Returns to scale . i. Y = Kal1-a ii. Y = (KL-ay iii. Y = KOLB iv. Y = (K 1/4L 1/8), v. Y = KL
Returns to scale. A production function has constant returns to scale with
Returns to scale. A production function has constant returns to scale with respect to inputs with inputs K and L if for any z > 0: F(z · K, z ·L) = zF(K, L), For example, for a production function with constant returns to scale, doubling the amount of each input (i.e., setting z = 2) will lead to a doubling of the output from the production function. A production function has increasing returns to scale if for any z >1: F(z ·...
The following production function F(K,L) = K + (1/3)L exhibits a. increasing returns to scale. b....
The following production function F(K,L) = K + (1/3)L exhibits a. increasing returns to scale. b. constant returns to scale c. decreasing returns to scale. d. unstable (undefined) returns to scale.
The production function q = k0.620.5 exhibits: a. increasing returns to scale and diminishing marginal products...
The production function q = k0.620.5 exhibits: a. increasing returns to scale and diminishing marginal products for both k and 1. b. increasing returns to scale and diminishing marginal product for 1 only. c. increasing returns to scale but no diminishing marginal productivities. d. decreasing returns to scale.
The production function 9 = k1.270.5 exhibits: a. increasing returns to scale but no diminishing marginal...
The production function 9 = k1.270.5 exhibits: a. increasing returns to scale but no diminishing marginal productivities. b. decreasing returns to scale. C. increasing returns to scale and diminishing marginal product for / only. d. increasing returns to scale and diminishing marginal products for both k and I.
1. For a constant returns to scale production function: a. marginal costs are constant but the...
1. For a constant returns to scale production function: a. marginal costs are constant but the average cost curve as a U-shape b. both average and marginal costs are constant c. marginal cost has a U-shape, average costs are constant d. both average and marginal cost curves are U-shaped 2. The production function q = 10K +50L exhibits: a. increasing returns to scale b. decreasing returns to scale c. constant returns to scale d. none of the above
10. Verify that If the production function exhibits constant returns to scale, the cost function may...
10. Verify that If the production function exhibits constant returns to scale, the cost function may be written as c(w, y)-ye(w, 1). (Hint: If the production function exhibits constant returns to scale, then it is intuitively clear that the cost function should exhibit costs that are linear in the level of output: if you want to produce twice as much output it will cost you twice as much.)
For the production function Q = 3L + K, returns to scale: is constant is increasing...
For the production function Q = 3L + K, returns to scale: is constant is increasing is decreasing Can be increasing, decreasing, or constant depending on the values of Land K.
Let the production function be q=ALK. The function exhibits increasing returns to scale if O A....
Let the production function be q=ALK. The function exhibits increasing returns to scale if O A. a + b < 1 O B. a + b > 1 OC. a + b = 1 O D. Cannot be determined with the information given
For the production function Q = 8L2K2, returns to scale: is increasing. is constant. is decreasing....
For the production function Q = 8L2K2, returns to scale: is increasing. is constant. is decreasing. n be increasing, decreasing, or constant depending on the values of L and
Q#02 Check whether the following production function exhibits (10 Marks) Constant Returns to Scale Increasing Returns to scale Decreasing Returns to scale . i. Y = Kal1-a ii. Y = (KL-ay iii. Y = KOLB iv. Y = (K 1/4L 1/8), v. Y = KL
The production function q = k0.620.5 exhibits: a. increasing returns to scale and diminishing marginal products for both k and 1. b. increasing returns to scale and diminishing marginal product for 1 only. c. increasing returns to scale but no diminishing marginal productivities. d. decreasing returns to scale.
The production function 9 = k1.270.5 exhibits: a. increasing returns to scale but no diminishing marginal productivities. b. decreasing returns to scale. C. increasing returns to scale and diminishing marginal product for / only. d. increasing returns to scale and diminishing marginal products for both k and I.
10. Verify that If the production function exhibits constant returns to scale, the cost function may be written as c(w, y)-ye(w, 1). (Hint: If the production function exhibits constant returns to scale, then it is intuitively clear that the cost function should exhibit costs that are linear in the level of output: if you want to produce twice as much output it will cost you twice as much.)
For the production function Q = 3L + K, returns to scale: is constant is increasing is decreasing Can be increasing, decreasing, or constant depending on the values of Land K.
Let the production function be q=ALK. The function exhibits increasing returns to scale if O A. a + b < 1 O B. a + b > 1 OC. a + b = 1 O D. Cannot be determined with the information given
For the production function Q = 8L2K2, returns to scale: is increasing. is constant. is decreasing. n be increasing, decreasing, or constant depending on the values of L and
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