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a) Do the following functions exhibit increasing, constant, or decreasing returns to scale? Prove this mathematically (6 Marks) Q=4K+8LQ=10K2LQ=K0.4L0.2 b) The constant elasticity of substitution
a) Do the following functions exhibit increasing, constant, or decreasing returns to scale? Prove this mathematically (6 Marks) Q=4K+8LQ=10K2LQ=K0.4L0.2 b) The constant elasticity of substitution production function is given as follows Q=(4K0.8+6L0.2)4 i) Determine the marginal product of labor (1 Mark) ii) Determine the marginal product of capital (1 Mark) iii) Determine the marginal rate of technical substitution (1 Mark) iv) Determine the elasticity of substitution (3 Marks) c) Suppose a company has the following Leontief production function Q=min(10K,40L) i) List combinations of K and L that will produce 1000 units of output (2 Marks) ii) Graph the isoquant associated with the combinations you generate (2 Marks) d) Suppose initially 1 fisherman working with one fishing road captures 10 fish in a day. How many will 2 fishermen working with 2 fishing rods produce in a day? Illustrate the concepts of constant, increasing and decreasing returns to scale using well labeled diagrams (4 Marks)
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