Quiz 13 Returns To Scale Ans

Quiz 13 Returns To Scale Ans - ] 2 y n = [0.3 t 1/2 K o 1/2...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Shomu Banerjee ECON 201 RETURNS TO SCALE ANSWERS Find the returns to scale for the following production functions where y denotes output, and K , L , and E are inputs. Show your work! (a) y = K 1/3 . L 1/3 y o = K o 1/3 . L o 1/3 y n = ( tK o ) 1/3 . ( tL o ) 1/3 y n = ( t ) 1/3 ( K o ) 1/3 . ( t ) 1/3 ( L o ) 1/3 y n = ( t 1/3 . t 1/3 )( K o 1/3 . L o 1/3 ) y n = ( t )( K o 1/3 . L o 1/3 ) y n = t 2/3 . y o DRS (b) y = 4 K . L . E y o = 4 . K o . L o . E o y n = 4 . tK o . tL o . tE o y n = t 3 (4 K o . L o . E o ) y n = t 3 ( y o ) IRS (c) y = [0.3 K 1/2 + 0.7 L 1/2 ] 2 y o = [0.3 K o 1/2 + 0.7 L o 1/2 ] 2 y n = [0.3( tK o ) 1/2 + 0.7( tL o ) 1/2
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ] 2 y n = [0.3 t 1/2 K o 1/2 + 0.7 t 1/2 L o 1/2 ] 2 y n = [ t 1/2 (0.3 K o 1/2 + 0.7 L o 1/2 )] 2 y n = t (0.3 K o 1/2 + 0.7 L o 1/2 ) 2 y n = t . y o CRS (d) y = (2 K +3 L ) 1/2 y n = [2( tK o ) + 3( tL o )] 1/2 y n = [ t . (2 K o + 3 L o )] 1/2 y n = t 1/2 (2 K o + 3 L o )] y n = t 1/2 y o DRS...
View Full Document

Ask a homework question - tutors are online