Question

#11 Let a production function exist such that Q = (K^.35 L^.75)

a) does this production function exhibit increasing, decreasing, or constant returns to scale? explain what your answer means and how you know. (each may be answered by one or two sentences at most)

b) What is the effect on Q of a 10% increase in labor hours, keeping K constant?

c) What is the effect on Q of a 10% increase in capital usage, keeping L constant?

Answer 1