3) Consider the production functions Q = 2 K+3 Land Q = 2 KL+3 L?. Show that only one of these production functions is homogeneous
3) Consider the production functions Q = 2 K+3 Land Q = 2 KL+3 L?. Show that only one of these production functions is homogeneous and calculate its returns to scale. Explain the meaning of your result for the returns to scale. [5] Suppose Q = 2 K+3 L' and that the company is operating with K = 100 and L = 20. Calculate the marginal product of labour and the marginal product of capital. Find the marginal rate of technicalsubstitution (MRTS) and explain what this means by drawing an isoquant on an (L,K) graph. [5]
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