Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following production function f(x_1,x_2 )=Ax_1^ x_2^, where A, and are strictly positive constants, i.e., A, , 0. Determine returns to scale

Consider the following production function f(x_1,x_2 )=Ax_1^α x_2^β, where A, α and β are strictly positive constants, i.e., A, α, β0. Determine returns to scale for the distinct values of α and β. Suppose α = β=1/2 and A=1 and let (x_1,x_2;y) be a production plan. Suppose (4,4;4) is feasible. What about (9,8;8)?

Step by Step Solution

3.50 Rating (167 Votes )

There are 3 Steps involved in it

Step: 1

Returns to scale are determined by the values of and If 1 and 1 then returns to scale are decre... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Douglas Bernheim, Michael Whinston

2nd edition

73375853, 978-0073375854

More Books

Students also viewed these Chemical Engineering questions

Question

What is Accounting?

Answered: 1 week ago

Question

Define organisation chart

Answered: 1 week ago

Question

What are the advantages of planning ?

Answered: 1 week ago