Question

I need step by step solution to the following this question asap .I have limited time so please do it quickly with detailed explanation

thanks in advance/Ha

1 1 The Elf ring manufacturer, Elrond Rings, uses capital, K, and labour, L, to produce rings according to the following production function: f(K, L) = KĀLĀ. Let r and w be the prices of capital and labour respectively. P is the price of rings. The markets for rings, capital and labour are all perfectly competitive. a) Does Elrond Rings' production technology exhibit increasing, decreasing or constant returns to scale? Explain your answer using mathematics. (5 points) b) What is the technical rate of substitution between capital and labour for Elrond Rings? (5 points) In the short run, the level of capital is fixed at K = K. c) Set up the short run profit maximization problem. Calculate the short run optimal level of labour. (5 points)

Answer 1

a = krachu a Decreas plak, d) = Caksu cave dhe kryetru dha (K) Thus constant return to scale. MATS = MR Vu C 3/4 kV - mlx = K 3/4 (ry a C) I K= as they VW