Solved: Nature of returns to scale for the production function, Microeconomics

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Nature of returns to scale for the production function

Task: Consider the production function Q=100L^.5K^.4. Suppose L=1 and K=1 so that Q=100

Q1. If L is increased by 1 percent, that is to L=1.01 with capital unchanged, what is the resulting percentage increase in output?

Q2. Describe the nature of returns to scale for this production function.

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Microeconomics: Nature of returns to scale for the production function

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Solution Preview :

Prepared by a verified Expert

Microeconomics: Nature of returns to scale for the production function

Reference No:- TGS01749875

Have a Question? (oR Write a Review)

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Prepared by a verified Expert

Microeconomics: Nature of returns to scale for the production function

Reference No:- TGS01749875

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