econ 201 - ps3

econ 201 - ps3 - ECONOMICS 201 SPRING 2012 PROBLEM SET 3 1....

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1 ECONOMICS 201 SPRING 2012 PROBLEM SET 3 1. Starbucks’ frappuccino production function is } , 2 min{ ) , ( 2 1 2 1 X X X X f y . Draw the isoquants corresponding to 4 y and 8 y 2. Calculate 1 MP , 2 MP , and MRTS for the following production functions. a. 2 1 2 1 ) , ( bX aX X X f y b. b a X AX X X f y 2 1 2 1 ) , ( 3. Characterize the returns to scale (decreasing, constant, or increasing) associated with the following production functions. a. 2 1 2 1 2 5 . 0 ) , ( X X X X f y b. 2 . 0 2 5 . 0 1 2 1 2 ) , ( X X X X f y c. } 4 , 3 min{ ) , ( 2 1 2 1 X X X X f y 4. Taylor Swift produces sugary smiles with the Cobb-Douglas production function 2 1 2 1 ) , ( X X X X f y . What values of alpha and beta make her production function (a) DRS (decreasing returns to scale), (b) CRS (constant returns to scale), and (c) IRS (increasing returns to scale)? 5.
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econ 201 - ps3 - ECONOMICS 201 SPRING 2012 PROBLEM SET 3 1....

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