7.1 Labor, L, and capital, K, are the only inputs in each of the following production functions:...

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7.1 Labor, L, and capital, K, are the only inputs in each of the following production functions:

a. q1 = (L + K)2.

b. q2 = (2L + 2K)2.

c. q3 = (20 + 2L + 2K)2.

For each production function, use a spreadsheet to find the output associated with the following output combinations: L = 2, K = 2; L = 4, K = 4; and L = 8, K = 8. Determine whether each production function exhibits increasing returns to scale, decreasing returns to scale, constant returns to scale, or variable returns to scale over this range.

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Managerial Economics And Strategy

ISBN: 9780135640944

2nd Global Edition

Authors: Jeffrey M. Perloff, James A. Brander

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