1) Market 3 is characterised by the following cost function: C(x)=0.5 x 2. Is this technology characterised by increasing, constant or decreasing returns to scale? Is this a natural monopoly? Y/N {Hint: when making the comparison, it might help to fix the value of X and the number of firms N: for instance, X=4 and N=4}
2) Market 4 is characterised by the following cost function: C(x)=0.5 x 2+36. Is this technology characterised by increasing, constant or decreasing returns to scale? {Enter I for increasing, C for constant or D for decreasing}
3) Is this a natural monopoly? Y/N {Hint: when making the comparison, it might help to fix the value of X and the number of firms N: for instance, X=4 and N=4}
1) Market 3 is characterised by the following cost function: C(x)=0.5 x 2. Is this technology characterised by increasin...
Suppose the production function is Cobb-Douglas and f(x1, x2) =
x^1/2 x^3/2
(e) What's the technical rate of substitution TRS (11, 12)? (f) Does this technology have diminishing technical rate of substitution? (g) Does this technology demonstrate increasing, constant or decreasing returns to scale?
Problem 1: A firm has the following production function: min{x1, 2x2) f(x,x2)= A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the optimality condition that determines the firm's optimal level of inputs? C) Suppose the firm wants to produce exactly y units and that input 1 costs $w per unit and input 2 costs $w2 per unit. What are the firm's conditional input demand functions? D) Using the information from part D), write...
1a) A production function has the form f(a,b) = a^2 x b^3 . Does this function exhibit constant, increasing, or decreasing returns to scale? 1b)A production function has the form f(a,b) = 3a^1/2 x b^1/2. Does this function exhibit constant, increasing, or decreasing returns to scale? Explain. Thank you.
. Discuss about returns to scale of following production function. (a) f(x1, x2) = x a 1 +x a 2 b , where a and b are positive constant. (Hint: ab < 1, ab = 1 and ab > 1.) (b) f(x1, x2) = √ x1 + x 2 2 . (Hint: Does it satisfy the definition of increasing return to scale, constant returns to scale, or decreasing returns to scale. How can this be?)
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...
An economy has a Cobb Douglas production function, given by: a, (1-a) (1) YAK L Where Yis equal to total production, K is equal to the capital input of production and L is equal to the labour input of production. The constant, A, represents technology in the economy and a the elasticity of capital. function exhibits, decreasing, increasing or constant returns to scale. [ 10 Marks A2. Carefully derive the marginal product of labour and explain how this might be...
Problem 4: A firm has the following production function: Xi , X2)=X1 , X2 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in x1. Is the marginal product of input 2 increasing, constant, or decreasing in x2? D) Suppose the firm...
A firm has the following production function: ?(?1, ?2) = ???{?1, 2?2} A) Does this firm’s technology exhibit constant, increasing, or decreasing returns to scale? B) What is the optimality condition that determines the firm’s optimal level of inputs? C) Suppose the firm wants to produce exactly ? units and that input 1 costs $?1 per unit and input 2 costs $?2 per unit. What are the firm’s conditional input demand functions? D) Using the information from part D), write...
(3) For the function y =-2(x-1)2 find a) vertex b) axis of symmetry c) maximum or minimum value d) graph the function e) Intervals of increasing and decreasing °For the function y = 0.5(x + 3)2 + 2, find a) vertex b) axis of symmetry c) maximum or minimum value d) graph the function e) Intervals of increasing and decreasing
Problem 3: A firm has the following production function: f(x1,x2) = x7/3x4/3 A) Does this firm's technology exhibit constant, increasing, or decreasing returns to scale? B) What is the firm's Technical Rate of Substitution? What is the optimality condition that determines the firm's optimal level of inputs? C) Is the marginal product of input 1 increasing, constant, or decreasing in X1. Is the marginal product of input 2 increasing, constant, or decreasing in xz? D) Suppose the firm wants to...