Assignemnt 1_Summer 2017.docx

Assignemnt 1_Summer 2017.docx - Department of Economics...

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Department of Economics Carlton University ECON2020-A. Intermediate Microeconomics I: Producers and Market Structure 2017 Summer Assignment 1. Due in the class May 18 2017 Total 1 pages with 7 questions Note: Students should show the step-by-step answers to the questions above. If only final answers were provided, no marks will be counted for the question. Question 1. A firm has a production function: f ( K ,L )= 50 LK 0.5 + L 2 K 2 L 3 K 3 a. What is its short-run production function if capital is fixed at K=4? b. What are the firm’s marginal product of labour and average product of labour in the short run? c. Calculate the elasticity of output with respect to labour in the short run. Question 2. Do the following functions exhibit increasing, constant, or decreasing returns to scale? Explain your answers. a. The production function Q = M 0.5 K 0.5 L 0.5 , where M is materials, K is capital and L is labour. b. q = L + 0.5K c. q = 0.5 LK 0.25 d. 1 2 4 4 q L K Question 3. A firm has the following production function: q =( L 1 / 3 + K 1 / 3 ) 3 a. Determine the returns to scale for this function.
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