Unformatted text preview: q = L 1 4 K 3 4 . When K = 1 and q = 2, what are the MP L and the MRTS ? 4. Suppose that a production function, f , is homogenous of degree γ , i.e., f ( λL,λK ) = λ γ f ( L,K ). Under what conditions does such a production function have constant returns to scale? Prove the following statements about such a production function: (a) MP L is homogenous of degree γ-1. (b) L df dL + K df dK = γf ( L,K ). 5. For what values of a and b will the production function f ( L,K ) = ( L a + K a ) 1 b for a , b > exhibit increasing, constant, or decreasing returns to scale? 1...
View Full Document
- Spring '08
- Economics of production, Monotonic function