Question

Under what conditions des Cobb Douglas production function ? exhibit decreasing content, increasing res o Show how to changes of th e doute increases by Property formal your expres sing the tools in the politie Hoverowe to yo u can be W the us do the a ction and created with the character Giveauforderte Lega h en the production function h o w return to For m ore the price decalces) turns to scale,g<1, then the production function s decreasing retume to lend then the production Action creasing range , and doing the mus wil create put ty cent e r onded to be

Answer 1

Double the inputs L and k, well = A(2L) 9 (2 kb = gato TALA KO J o It if inputs double a; a and b, , then output as a function increases by It a= atb 1 then the production haction exhibits constant return to scale because doubling the inputs exactly doubles the output. It 971, then the production function exhibits increasing retuons to scale, because double the inputs increases the output by more than double. If gel, then the production function Thibits decreasing returns to scale because doubling the inputs increases the output by less than double

If g = 0.53, then the production function exhibits decreasing returns to scale because a 21. And doubling the inputs will increase output by (2)0.53 = 1.44 ie 0.014% V