This preview shows pages 1–2. Sign up to view the full content.
Christine Drews
Econ 302 – Toossi
Section 2
Problem set 9
5/13/2009
Chapter 9 Appendix Problem
1.
Q = 4(K^1/2)(L^1/2)
α = ½ and β = ½, therefore α + β = 1, and when this is the case with a CobbDouglas
problem, the production function has a constant return to scale.
This function will fail to
satisfy the law of diminishing return unless one of the variables, k or l, is fixed, meaning
that this is a short term function.
As long as this function is in the longrun, there is no
diminishing return.
b.
Q = a(K^2)b(L^2)
α = 2 and β = 2, therefore α + β = 4, and when this is the case with a CobbDouglas
problem, the production function has an increasing return to scale.
This function
will fail to satisfy the law of diminishing return unless one of the variables, k or l,
is fixed, meaning that this is a short term function.
As long as this function is in
the longrun, there is no diminishing return.
4.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 04/07/2008 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.
 Spring '08
 TOOSSI

Click to edit the document details