4. Suppose a firm has the following production function: a f[L,ft') 2 (L10 + Hp]? 1li'ii'here L is {the quantity:r of] labour, and if. is [the quantity of] capital. p and B are parameters with D s: p s: 1 and}? :3 ll]. a. Determine for what values of p and B, the firm will have Increaslng returns to scale. {2} Define the elastlclt'g.t of substitution between inputs Labour and capital to be: is) 2 I is) s: as y . _ 1ll'il'here . = E and fa; : Eand in is the [natural] logarithm. The closer arm is to zero; the more difficult it is to substitute between the inputs; the larger arm is, the easier it is to substitute between them. Derive the elasticity of substitution between labour and capital as a function of the parameters. Hint: totally differentiate db: G). Also, simplify the expression E and then totally differentiate dln (lgL) {6} fit fit