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Unformatted text preview: What about r ? 2) Assume that F ( U , V ) exhibits constant returns to scale for U , V 0. a) Show that F ( U , V ) = UF U ( U , V ) + VF V ( U , V ) for all U , V 0. (Hint: Write down an equation that describes what happens if we increase U and V by a factor > 0 and differentiate by .) b) Now suppose that Y = F ( K , L ). Define K Y Y K K = L Y Y L L = Show that K + L = 1. c) Show that for a Cobb-Douglas production function F ( U , V ) = U V 1-that K = ....
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This note was uploaded on 01/09/2011 for the course ECON 7230 taught by Professor Feigenbaum during the Spring '10 term at Utah Valley University.
- Spring '10