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the steps instead of just giving an answer.
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Solution:
Constant returns to scale means output will increase in the same proportion as the increase in inputs.
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Please explain and show all
the steps instead of just giving an answer.
1. (Production function)...
1. (Production function) Condsider a representitive firm with a production function which is (i) twice continuously...
1. (Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (ii) exhibits positive and diminishing marginal product and (iii) has constant return to scale: Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit max F(K, L) - RK - wL K,L a) Denote FK , FL=52. Show that...
Please explain and show all the steps instead of just giving an answer. (Production function) Condsider...
Please explain and show all the steps instead of just giving an
answer.
(Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (i) exhibits positive and diminishing marginal product and (iii) has constant return to scale: 1. Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit: max F(K,...
(Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable;...
(Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (ii) exhibits positive and diminishing marginal product and (ii) has constant return to scale: Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit: max F(K, L) - RK - wL K,L 3. (Solow Model) Denote that Y F(K, L)...
Please explain an show steps Problem 5: Consider the following variation of the aggregate production function....
Please explain an show
steps
Problem 5: Consider the following variation of the aggregate production function. Now firms must use oil M to produce output (in addition to labor and capital). The price of a unit of oil is p max II, = AK“LPM? – w L - rK – PM (a) Find a first-order condition for the firm's demand for oil. (b) What must be true about the parameters a, b, and y if this production function exhibits constant...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to you. It says that output Q is related to inputs K and L as: This production function implies that the cost-minimizing demand for capital will be Ou where w is the wage rate, r is the cost of capital, Q is output level, and α and β are parameters We will assume that α + β 1; this is the constant-returns-to-scale assumption we saw...
Returns to scale. A production function has constant returns to scale with
Returns to scale. A production function has constant returns to scale with respect to inputs with inputs K and L if for any z > 0: F(z · K, z ·L) = zF(K, L), For example, for a production function with constant returns to scale, doubling the amount of each input (i.e., setting z = 2) will lead to a doubling of the output from the production function. A production function has increasing returns to scale if for any z >1: F(z ·...
1. A production function is given by f(K, L) = L/2+ v K. Given this form,...
1. A production function is given by f(K, L) = L/2+ v K. Given this form, MPL = 1/2 and MPK-2 K (a) Are there constant returns to scale, decreasing returns to scale, or increasing returns to scale? (b) In the short run, capital is fixed at -4 while labor is variable. On the same graph, draw the 2. A production function is f(LK)-(L" + Ka)", where a > 0 and b > 0, For what values of a and...
2) Assume that a firm faces the following production function: q(L, K) = {1/4K 3/4 a)...
2) Assume that a firm faces the following production function: q(L, K) = {1/4K 3/4 a) Does this function represent increasing, decreasing or constant return to scale? b) Do we have diminishing productivity for factors of production? c) Find short-run cost function if K=256, w=3 and r=4
Consider a firm that has the following CES production function: Q = f(L,K) = [aL^ρ + bK^ρ]^1/ρ where ρ ≤ 1. Please...
Consider a firm that has the following CES production function: Q = f(L,K) = [aL^ρ + bK^ρ]^1/ρ where ρ ≤ 1. Please clearly show each STEP and make sure your handwriting is LEGABLE. Thank you Derive the MRTS for this production function. Does this production function exhibit a diminishing MRTS? Justify using derivatives and in words. What does this imply about the shape of the corresponding isoquants? (10 points) What are the returns to scale for this production function? Show...
1. Consider a firm that has the following CES production function: Q = f(L,K) = [aLP...
1. Consider a firm that has the following CES production function: Q = f(L,K) = [aLP + bK°]!/p where p a. Derive the MRTS for this production function. Does this production function exhibit a diminishing MRTS? Justify using derivatives and in words. What does this imply about the shape of the corresponding isoquants? (10 points) b. What are the returns to scale for this production function? Show and explain. Explain what will happen to cost if the firm doubles its...
1. (Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (ii) exhibits positive and diminishing marginal product and (iii) has constant return to scale: Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit max F(K, L) - RK - wL K,L a) Denote FK , FL=52. Show that...
Please explain and show all the steps instead of just giving an
answer.
(Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (i) exhibits positive and diminishing marginal product and (iii) has constant return to scale: 1. Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit: max F(K,...
(Production function) Condsider a representitive firm with a production function which is (i) twice continuously differentiable; (ii) exhibits positive and diminishing marginal product and (ii) has constant return to scale: Y = F(K, L) Given the capital rental price R and the wage w, and the good price P is normalized to 1, the firm can choose K and L to maximize its profit: max F(K, L) - RK - wL K,L 3. (Solow Model) Denote that Y F(K, L)...
Please explain an show
steps
Problem 5: Consider the following variation of the aggregate production function. Now firms must use oil M to produce output (in addition to labor and capital). The price of a unit of oil is p max II, = AK“LPM? – w L - rK – PM (a) Find a first-order condition for the firm's demand for oil. (b) What must be true about the parameters a, b, and y if this production function exhibits constant...
All firms produce according to a Cobb-Douglas production function. This production function should look familiar to you. It says that output Q is related to inputs K and L as: This production function implies that the cost-minimizing demand for capital will be Ou where w is the wage rate, r is the cost of capital, Q is output level, and α and β are parameters We will assume that α + β 1; this is the constant-returns-to-scale assumption we saw...
1. A production function is given by f(K, L) = L/2+ v K. Given this form, MPL = 1/2 and MPK-2 K (a) Are there constant returns to scale, decreasing returns to scale, or increasing returns to scale? (b) In the short run, capital is fixed at -4 while labor is variable. On the same graph, draw the 2. A production function is f(LK)-(L" + Ka)", where a > 0 and b > 0, For what values of a and...
2) Assume that a firm faces the following production function: q(L, K) = {1/4K 3/4 a) Does this function represent increasing, decreasing or constant return to scale? b) Do we have diminishing productivity for factors of production? c) Find short-run cost function if K=256, w=3 and r=4
1. Consider a firm that has the following CES production function: Q = f(L,K) = [aLP + bK°]!/p where p a. Derive the MRTS for this production function. Does this production function exhibit a diminishing MRTS? Justify using derivatives and in words. What does this imply about the shape of the corresponding isoquants? (10 points) b. What are the returns to scale for this production function? Show and explain. Explain what will happen to cost if the firm doubles its...
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