ps5_09 - Cornell University Economics 3130 Problem Set 5...

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Cornell University Economics 3130 Problem Set 5 Due 3/6/09 1. True/False/Explain. State whether each of the following is true or false, and explain why. Please limit your answers to no more than two sentences. All credit is based on the explanation. (a) If a production function has decreasing marginal products in each of its inputs, then it cannot exhibit increasing returns to scale. (b) If a production function has constant marginal products in each of its inputs, then it must exhibit constant returns to scale. (c) (Exercise 11A.8 from the text) If the Law of Diminishing Marginal Product did not hold in the dairy industry, I could feed the entire world with milk from a single cow. (d) Average costs can never rise while marginal costs are falling. 2. For each of the following production functions: 1) determine whether whether they exhibit increasing, decreasing or constant returns to scale, 2) determine whether the function is homogeneous of any degree, and 3) determine for each of the inputs whether
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ps5_09 - Cornell University Economics 3130 Problem Set 5...

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