Suppose that in the twenty-first century the production of semiconductors requires two inputs: capital (denoted by K)

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Suppose that in the twenty-first century the production of semiconductors requires two inputs: capital (denoted by K) and labor (denoted by L). The production function takes the form Q = √KL. However, in the twenty-third century, suppose the production function for semiconductors will take the form Q = K. In other words, in the twenty-third century it will be possible to produce semiconductors entirely with capital (perhaps because of robots).
a) Does this change in the production function change the returns to scale?
b) Is this change in the production function an illustration of technological progress?

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Microeconomics

ISBN: 9781119554844

6th Edition

Authors: David Besanko, Ronald Braeutigam

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